Did you know that several countries advertise product pricing with the sales tax included? If only we had that in the United States!
Unfortunately, if you’re shopping in the United States, calculating the total cost before checkout is difficult. What if you’re checking out customers and the power goes out? Do you know how to figure out sales tax by hand?
Even the most unlikely scenarios can happen on occasion. Make sure you’re prepared for any situation! Read this guide on calculating sales tax to learn what you need to know.
Using Tax Rate to Find Total Cost
Use this method if you already know the tax and want to find out how much the total cost of the item will be.
First, turn the sales tax into a decimal. In other words, divide that number by one hundred. For example, 5% becomes 0.05, or 7.2% becomes 0.72.
Next, you’ll take the cost of the item and multiply it the decimal to get the amount of the tax. For example, let’s say your item is $50 and your tax percentage is 5%. That means that the amount of tax is 50 x 0.05 = $2.50.
Finally, you’ll need to add this value to the cost to get your total. In the example shown here, the total cost would be $52.50.
Using Total Cost to Find Tax Rate
If you need to know how to figure out sales tax from the total cost of the item, use this method.
First, subtract the amount of money the item costs from the total bill. Let’s say you bought a $50 item, and it rang up as $55. You’ll want to start by taking $55 – $50 = $5.
Now take this value and divide it by the original price to get the decimal value of the tax rate. Here, $5 ÷ $50 = 0.1. Similar to the above situation, we’ll want to convert that value. We can multiply that value by 100 to get the percentage: 0.1 x 100 = 10% tax rate.
If we use this percentage calculator instead of a normal calculator, it turns our numbers directly into a percentage. Simply put the tax on top ($5) and the original price on the bottom ($50). The calculator will give you the tax rate, 10%.
Additional Things to Note
Note that different goods may have different tax. For example, let’s say you order food and a beer at a restaurant. Many states tax those two items differently.
In these cases, the above methods will not work. That’s because you’ll end up paying different tax on different items. In other words, your bill has two different values for tax applied.
And some U.S. states don’t have any sales tax. So if you’re in Alaska, Delaware, Montana, New Hampshire, or Oregon, skip this process altogether! There isn’t any sales tax that you need to calculate.
How to Figure Out Sales Tax: Now You Know!
Now you know how to figure out sales tax! Even if disaster strikes, now your business will be prepared. Consider bookmarking that percentage calculator to make the process go even more smoothly!
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