5 Ways to Calculate Sales Tax - wikiHow (2024)

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Co-authored byGina D'Amore

Last Updated: February 11, 2024Fact Checked

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1. 1

   Multiply the cost of an item or service by the sales tax in order to find out the total cost. The equation looks like this: Item or service cost x sales tax (in decimal form) = total sales tax. Add the total sales tax to the Item or service cost to get your total cost.^[1]

   Calculating Sales Tax
   Change the sales tax into decimal form. For instance:

   7.5% sales tax becomes .075 in decimal form
   3.4% sales tax becomes .034 in decimal form
   5% sales tax becomes .05 in decimal form

   Formula: Item or service cost x sales tax (in decimal form) = total sales tax.
   Sample calculation: $60 (item cost) x .075 (sales tax) = $4.50 total sales tax

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   Once you've calculated sales tax, make sure to add it to the original cost to get the total cost. If the total sales tax is $5 and your original item cost was $100, your total cost will be $105.^[2]

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1. 1

   Try this example. You're buying a basketball in the state of Colorado, where sales tax is 2.9%.^[3] The basketball costs $25. How much is the total cost of the basketball, including sales tax?

   Solution
   Convert the percentage sales tax into decimal form: 2.9% becomes .029.
   Multiply it out: $25 x .029 = $.73, or $25.73 total cost

2. See Also

   $60,000 income tax calculator 2024 - California - salary after taxNet Income After Taxes (NIAT): Definition, Calculation, ExampleHow to Calculate Sales Tax - AccurateTax.comHow to Enter an Excel Formula With Price Plus Tax

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   Try another example. You're buying groceries in the state of Mississippi, where the sales tax is 7%.^[4] The grocery bill costs $300. How much is the total cost of the grocery bill, including sales tax?

   Solution
   Convert the percentage sales tax into decimal form: 7% becomes .07.
   Multiply it out: $300 x .07 = $21, or $321 total cost

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   Try a third example. You're buying a car in the state of Massachusetts, where sales tax is 6.25%.^[5] The car costs $15,000. How much is the total cost of the car, including sales tax?

   Solution
   Convert the percentage sales tax into decimal form: 6.25% becomes .0625.
   Multiply it out: $15,000 x .0625 = $937.5, or $15,937.5 total cost

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1. 1

   "De-calculate" by working backward if you know the original cost of the item.^[6] You can work backwards to figure out the sales tax rate

   as long as you know how much the item initially cost.

   Example
   Let's say you bought a computer, listed at $1,200, and the total bill came out to $1,266, meaning that the sales tax was $66. What is the sales tax rate?
   Take the tax rate and divide it by the original price: $66 ÷ $1,200 = .055
   Convert the decimal into a percentage by moving the decimal point two places to the right: .055 becomes 5.5%
   Your original sales tax rate is 5.5%

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1. 1

   Know that some American states do not have sales tax. These states currently include:^[7]

   • Delaware
   • New Hampshire
   • Montana
   • Oregon
   • Alaska
2. 2

   Know that states levy different taxes for different goods. A state or district, such as District of Columbia, may have a general sales tax of 6%, but set the tax rate on liquor and prepared food at 10%.^[8]

   • New Hampshire, for example, has no general sales tax but still taxes restaurants, food services, hotels, room rentals, and motor vehicle rentals at 9%.^[9]
   • Massachusetts, for example, only starts counting sales tax associated with clothing when the bill exceeds $175. So if you buy under $175 worth of clothing in Massachusetts, the state government won't tax it.^[10]
3. 3

   Be sure to check with your local state and city when calculating sales tax. We don't often talk of "city sales tax," but it's there.^[11] Most people, however, just lump it in with state sales tax. If you want to know exactly how much money you'll pay in taxes for a certain item,

   check your local state and city tax laws

   for more information

   • Each city has its own tax, and it depends on where it's shipping to and where it's shipping from.

   

   Make real-world math click. "I've struggled with word problems and applying math concepts to real-life situations. After searching the web for help with sales tax homework, I found this guide. The step-by-step examples using actual tax rates showed me how to calculate total costs. Now, these practical math problems make sense!" - Ella K.

   Deliver your "aha" moment. "As a visual learner, I've never fully grasped how to figure sales tax. But the pictures demonstrating the equations in this article finally made it click! I followed along on my calculator, and the lightbulb went on. These effective visuals, paired with clear instructions, delivered my "aha" moment." - Christen J.

   Empower those intimidated by math. "Honestly, I've always found math intimidating and avoided finance concepts like sales tax. But this article explained everything in simple terms, even I could understand. After just 10 minutes of following the examples, I grasped sales tax for the first time ever. It's empowering to gain this real-world skill." - Stacy R.

   Clarify a confusing real-world skill. "I've been stuck not understanding sales tax for years, even though I use it practically every day. This guide clearly walked through the formulas and calculations in a way I could finally comprehend. Breaking down a confusing real-world skill through visuals and straightforward instruction was so helpful." - Saffron R.

   We want to hear from you! Advice from our readers makes our articles better. If you have a story you’d like to share, tell us here.

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