# Money – Calculating Tax

One of the last things you’ll need to know before you can fully calculate your bill
at a store is how to calculate tax on your total order. Tax varies based on location
and based on what you are buying. Sales tax is charged on most items (clothing,
electronics, etc.), while food tax is charged on most items you buy at the grocery
store, like fresh fruit and vegetables, meat, cereal, etc. Food tax is usually less
than normal sales tax. To find out what sales and food tax are in your area, you
can either use an online search engine to find it, or you can look at the next receipt
you get from a store—-it will tell you near the bottom of the receipt what the sales
tax is. For our examples, we’re going to use 10.25% as the sales tax.

There are also two methods in calculating sales tax, similar to the methods used
to calculate discounts. You should use the one that makes the most sense to you,
or the one that best answers the question you are asked. We’ll show you both methods
here.

The first method involves calculating the amount (in money) that you would pay in
tax, and then adding it to the original price. We’re going to use our original price
of \$19.99, and we’re going to use 10.25% as the sale tax.

First, we would set up the multiplication problem. In order to do this, you would
take the percent and place it over 100 (using 100 as the denominator). You would
then multiply this fraction by \$19.99, like this: Once you figure out the multiplication and division, you get 2.048975. Obviously,
you cannot have this many decimal places when working with money, so you need to
round to the hundredths place. Once you round this number, your amount would be
\$2.05. \$2.05 is the amount you would pay in tax. In order to figure out the total
amount you’d pay, you need to add \$19.99 and \$2.05 to get \$22.04. \$22.04 is your
total amount owed, including tax.

The other method would use the following steps and it would give you the total amount
owed without taking the step to find the tax amount separately from the total amount.

First, think about the multiplication. Normally we multiply a percent by the original
amount, and then add those two amounts together. However, logic says that you know
you’re already paying 100% of the original amount, then another 10.25% in tax. Therefore,
you can use 110.25% in your multiplication calculation, and this number would be
your total amount owed. To use this method, you would automatically add 100% to
the percent of sales tax, and use that to multiply by each time. The multiplication
set up would then look like this: After calculating the multiplication and division, you would get \$22.038975 as your
answer. Obviously, you cannot have that many decimal places when dealing with money,
so you need to round to the hundredths place. Once you round the number, you would