Sales Tax Amount and Sales Tax Rate
What is the "Sales Tax"? What is the "Sales Tax Rate"?
- A sales tax is a consumption tax imposed by states, counties or/and cities and municipalities on the sale of goods and services.
- The sales tax is paid by the final consumer to the retailer at the point of sale as a percentage of the selling price of the sold good or service.
- This percentage, called the Sales Tax Rate, varies from state to state, in California for example there is a general sales tax rate of around 6%.
Formulas: How to calculate the total final price of a good or service? How to charge the sales tax to the selling price?
- "Sales tax amount" = "Sales tax rate%" × "Price without sales tax"
- "Sales tax charged price"
- = "Price without sales tax" + "Sales tax amount"
- = "Price without sales tax" + "Sales tax rate%" × "Price without sales tax"
- = (1 + "Sales tax rate%") × "Price without sales tax"
Example on how to calculate the Sales Tax
- Let's say that a person who lives in an area where the sales tax rate is 5% bought some cider for $50 dollars, then that person would have to pay a total of:
- 5% × $50 = 5/100 × $50 = $250/100 = $2.5 dollars in sales tax.
- And the total bill containing the sales tax would be in the end: $50 dollars + $2.5 dollars = $52.5 dollars.