How Do I Figure Sales Tax?

It can be embarrassing to whip out a calculator in the store in front of salespeople and other customers, so often, many people wonder, how do I figure sales tax quickly in my head? Sales tax often sneaks up on customers: a person might like the numbers they see on the price tag, but at the checkout counter, he or she might find that the price was actually a bit higher. Fortunately, it is really easy to figure out the sales tax on an item. 

Each state has their own legislation regarding sales tax policy. When you calculate the sales tax on an item, you must know the sales tax that applies to the state and county in which the store is located. 

If you do not know the sales tax facts that apply to the item at hand, you can visit the Federal Tax Administration online, where they have information about sales tax about every town, city, and state in the United States. Once you know the sales tax, you can calculate the amount of sales tax you will pay on an item. 

How Do I Figure Sales Tax In Another City or State?

Although many people are aware of the sales tax in their own city or state, most people are not aware of the specifics of sales tax policies in neighboring areas.  You can ask a sales clerk at any store to tell you the rate at which sales tax is applied. Friends or family who live in other areas of the country might share with you that they have either a higher or lower sales tax, compared with what is available in your location.

Computing the Sales Tax on an Item

Sales tax is a simple concept: if sales tax in your area is 5%, that means that when an item costs $1.00, the total price will be $1.05. Take the percentage given and think of it in terms of a decimal: 5% becomes $0.05. Add the tax with the price of the original item, and you have found your total price. 

Do not forget: The total price of an item is the marked price of an item plus the sales tax on the item. Check your work: The final price of an item will surely be higher than the price of an item without sales tax. 

Forgot your Calculator?

You get to the checkout line, and you want to know how much the total price of your purchase will be. When you reach into your purse, however, you realize that you forgot your calculator at home. You immediately ask yourself, how do I figure sales tax without a calculator?  Here’s a trick that will help you estimate sales tax and the total price: round your price up to the nearest $5. Multiply this number by the sales tax (in decimal point form). Add the original price with this new figure, and you know that your total price will only be a little bit less. 

On a slip of paper within your wallet, write down how much sales tax a certain item, worth $10 without sales tax, has next time you are at the store. This will serve as an example future reference of how much tax you are paying every time you spend $10. You will see that the amount you pay in sales tax adds up fast. 

Beat the System

Sales tax on large items like electronics might cause you to wonder, how do I figure sales tax on expensive items I need?  Sometimes mayors of cities or governors of states declare a tax-free day or weekend in order to stimulate the economy, encouraging people to shop. If you plan your shopping around these days, you will not pay sales tax. Save your big purchases, which often have high sales tax, until your next local tax-free day.