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How To Calculate Sales Tax

How To Calculate Sales Tax

Sales tax can look like it is extremely hard to work out. It is applied to everything we buy. This video aims to show you how to calculate sales tax.

We're going to look at how to calculate sales tax. Now, sales tax is made up of a state tax plus a local tax. The local tax will vary depending on where you are, for example, if you're in Alaska, the state tax is zero, and the local tax might be 7%.

If you're in California, both taxes might be 19%. So let's have a look at an example here and let's say that we have an item that costs 120 dollars, and that includes tax of 7.5%.

Now, most people will say the tax is 7.5% of the hundred and twenty dollars, however, that's not right. The 120 dollars already has the tax added in, so that's equal to 100 and 7.

5%, so to find out what the tax is, we need to figure out what 100% is. To do this, we take 120, divide it by 100 and 7.5, and this will tell us what 1% is.

I then multiply that by 100 to get back to the original price without tax and I find that the price is 111.63. So, now, we're in a position that if we were to calculate 7 ½ % of this final number, we would end up back at 120 dollars.

So, calculating sales tax, you need to figure out whether the sales tax is included in the price or whether it's been excluded. And that's how you find sales tax. .