It is important to know how much an item costs before you buy it. Buying goods is not as easy as just looking at the price tag of the item. Sales tax must be calculated carefully to determine the cost of sales. Tax prices always increase, these taxes have a significant impact when buying goods. Use the following tips to learn how to calculate sales tax when buying retail items.
Step
Method 1 of 4: Calculating Total Sales
Step 1. Multiply the cost of a good or service by the sales tax to find the total sales
The formula is as follows: “Cost of goods or services” x “sales tax” (in decimal form) = “total sales tax”. Add sales tax to the cost of goods or services to get the total sales.
Calculating Sales Tax
Convert percentage to decimal. As an example:
7.5% sales tax to 0.075 in decimal
3.4% sales tax to 0.034 in decimal
5% sales tax to 0.05 in decimal
Formula:
Price of goods or services x sales tax (in decimal form) = total sales tax.
Example:
IDR 600,000 (cost of goods) x 0.075 (sales tax) = IDR 45,000 total sales tax.
Step 2. Once you have calculated the sales tax, make sure to add the sales tax to the actual costs to get the total sales
If the total sales tax is IDR 50,000 and the actual cost of the item is IDR 1,000,000, then the total cost incurred will be IDR 1,050,000.
Method 2 of 4: Example
Step 1. Try the following example
You buy a basketball with sales tax is 2.9%. The price of the basketball is IDR 250,000. What is the total cost of the basketball, including the sales tax?
Answer
Convert the sales tax percentage to decimal form: 2.9% to 0.029.
Multiply by the price of the item: IDR 250,000 x 0.029 = IDR 7,250, so the total price is IDR 257,250.
Step 2. Try another example
You buy wholesale goods with sales tax is 7%. The wholesale price is Rp. 3,000,000. What is the total cost of the wholesale item, including sales tax?
Answer
Convert the sales tax percentage to decimal form: 7% to 0.07.
Multiply by the price of the item: IDR 3,000,000 x 0.07 = IDR 210,000, so the total price is IDR 3,210,000.
Step 3. Try the third example
You buy a car with a sales tax of 6.25%. The cost of the car is Rp. 150,000,000. What is the total cost of the car, including sales tax?
Answer
Convert the sales tax percentage to decimal form: 6.25% to 0.0625.
Multiply by the price of the item: IDR 150,000,000 x 0.0625 = IDR 9,375,000, so the total price is IDR 159,375,000.
Method 3 of 4: Calculating Average Sales Tax
Step 1. "Recalculate" by working backwards, as long as you know the true cost of an item or service
For example, if you buy a computer, the registered price for the computer is Rp. 12,000,000, and the total bill is Rp. 12,660, 000, meaning that the sales tax is Rp. 660,000. What is the average sales tax?
Example
For example, you buy a computer for Rp. 12,000,000 and then the total bill is Rp. 12,660,000. This means that the sales tax is Rp. 660,000. What is the percent sales tax rate?
Take the value of the tax you have to pay then divide by the original price of the goods: IDR 660,000 IDR 12,000,000 = 0,055
Convert the decimal to a percentage by shifting the comma two digits to the right: 0.055 to 5.5%
Your sales tax rate is 5.5%
Method 4 of 4: Other Information
Step 1. Be aware that some American states do not have a sales tax
The states include:
- Delaware
- New Hampshire
- Montana
- Oregon
- Alaska
Step 2. Know that the tax levy is different for each item
A state or district, such as the District of Columbia, may have a general sales tax of 6%, but the sales tax on liquor and ready-to-eat food is 10%.
- New Hampshire, for example, has no general sales tax but still has a 9% ready-to-eat tax.
- Massachusetts, for example, only calculates clothing-related sales tax when the bill exceeds $175. So if you buy clothes for under $175 in Massachusetts, the state government won't tax it.
Step 3. Be sure to check the rules that apply where you are when calculating sales tax
We don't often talk about "city sales tax," but it does exist. But most people directly apply sales tax in certain states. If you want to know how much money needs to be paid on certain goods taxes, check your local tax laws for more information.
