Math Equation to Calculate Sales Tax

by Peter Welch ; Updated September 11, 2015
When budgeting for a purchase, don't forget the sales tax.

In the United States, a sales tax is often tacked onto a sale as a percentage of the purchase price. The sales tax is a state rather than federal tax. As of January 1, 2012, the only states without a sales tax are Alaska, Delaware, Montana, New Hampshire and Oregon. California’s statewide sales tax of 7.25 percent is the highest in the nation.

Calculating Sales Tax

To calculate the sales tax owed on an item, first change the sales tax percentage to a decimal by moving the decimal point two places to the left (for example, 5 percent to 0.05, 7.5 percent to 0.075, 8.25 percent to 0.0825) and then multiply the price of the item by this figure. That is, S = I * T, where S = the sales tax owed on an item, I = the price of the item and T = the statewide sales tax as a decimal.

Example #1

Question: Frank buys a new skateboard in Cheyenne, Wyoming, for $50. Wyoming has a 4 percent state sales tax. How much sales tax must Frank pay on his purchase? Answer: First, convert 4 percent to a decimal by moving the decimal point two places to the left. 4 percent = 0.04. Then, multiply the price of the item ($50) by this decimal. 50 * 0.04 = 2 Therefore, Frank must pay a $2 sales tax on his purchase.

Example #2

Question: Utah has a state sales tax of 5.95 percent. Charlotte buys a book in Utah for $20. How much sales tax does Charlotte owe on her purchase? Answer: First, convert 5.95 percent to a decimal by moving the decimal point two places to the left. 5.95 percent = 0.0595. Then, multiply the price of the item ($20) by this decimal. 20 * 0.0595 = 1.19 Therefore, Charlotte owes 93 cents in sales tax on her purchase.

About the Author

Peter Welch is a freelance writer with avid interests in guitar, soccer, gardening, and American history. His work has appeared in various publications, including The Columbia Review, The Brookline Tab, and The Atlantic. He lives in Berkeley, CA with his cat, Jellybeans.

Photo Credits

  • tax calculator image by TEMISTOCLE LUCARELLI from Fotolia.com