Credit: ImageAfter.com

## Know Your Sales Tax Rate

Before purchasing anything an essential step in calculating sales tax is finding out what the tax rate in your area is. Different states have varying rates, as do most major cities. Other areas meanwhile have no sales tax at all, and the difference can be as much as 9.4% of the total value of most goods.

Furthermore different types of goods are taxed at a different rates than others. For example prepared foods are often taxed at a different rate than groceries. Similarly items considered to be luxury rather than staple goods are often charged at higher rates.

States without any sales tax are currently Alaska, Delaware, Montana, New Hampshire and Oregon.

Most state government websites have specific sales tax available, but the general rates can be found below or on the table at the bottom of the page:

## Methods of Calculating SalesTax

To calculate the added sales tax required, the first step is to add together the cost of any goods you want to purchase.

Secondly, multiply the total of the goods being purchased by the rate of tax.

For example a goods total of \$150 and a sales tax rate of 7%, would look something like this:

150 x 1.07 = 160.5 (\$160.50)

An alternative method that some people find easier is to divide the goods total by one hundred and then multiply the result by the sales tax rate, and then adding the answer to the original goods value. For example:

150 / 100 = 1.5

1.5 x 7 = 10.5

150 + 10.5 = 160.50 (\$160.50)

## Factoring in Discounts

Where sales tax can become slightly more difficult is when a discount is to be applied to the goods before the tax is added. The process of calculating the discount is the same as calculating tax however, and can be worked out as follows:

Using the same example from before of a \$150 purchase and sales tax of 7%, except this time with a 20% discount applied:

150 / 100 = 1.5

1.5 x 20 = 30

150 - 30 = 120 (\$120)

120 x 1.07 = 128.4 (\$128.40)

Credit: TaxFoundation.org