How to Calculate Tax

No matter what state you’re in, at some point you will have to pay a form of tax. Whether it’s sales tax, game tax, or income tax, you won’t be able to escape or negate paying taxes. Not all taxes are the same, however, and not every state charges taxes on the same items.

The first step to learning how to calculate tax is to know the rules for type of tax you are calculating:

• For instance, some states don’t charge a sales tax on any food that you purchase, while other states do, but don’t charge taxes for clothing purchases.
• Some states charge a sales tax no matter what you’re buying, and every state has its own amount of tax that is applied to each different taxable item. 

In order to calculate how much you’re going to pay in taxes, regardless of what the taxes are for (sales, game, etc.), you’ll need to know that the percentage is that the state requires for what you’re being taxed on.

Once you know the percentage of the taxes charged, you can multiply the amount you’re paying or the amount you’ve made by the percentage of tax charged in terms of hundredths. For instance, if you pay a tax of 5% on a purchase, you take the purchase amount and multiply it by 0.05. The answer you get is the amount of tax you’ll be charged.

Calculating income tax can be a bit tricker, since the tax brackets don't work quite the way they sound. For example, if you are in the 33 percent tax bracket, you aren't being charged 33 percent of your total income; you are only being charged 33 percent of the income above the dollar amount that put you into that tax bracket. To see this principle in action, and for an income tax calculator, visit Money Chimp.