Percent: Tax and Tip Time!

Lesson Plan - Get It!

Audio:

Take a minute and think about it.

• What is the same about both tax and tip?

Find out your state's sales tax percentage is if you are unsure. Ask a parent what percent tip they typically leave at a restaurant or somewhere similar.

• Is there anything you can think about that they have in common?

Perhaps you mentioned that one place you find them both is at a restaurant, or maybe somewhere else. The one thing to note is that they are both ADDED ON to a total amount as an additional cost.

When you buy something, you not only pay for the item, but also the tax associated with it. As you get to higher priced items, it is so important that you also account for the tax when planning and budgeting.

Each U.S. state differs on the amount of sales tax charged (as do some countries), so take a minute to look up your sales tax.

Concerning tips, in most cases, this is left up to you to decide. There are certain fancy restaurants that automatically add it to a total bill, but ofttimes, when you are receiving a service (hair salon, gas pump, pizza delivery, restaurant, etc.), it is up to you to decide how much to tip.

Standard tipping amounts vary from 10 to 20%.

Watch this video to learn How to Calculate Sales Tax by Howcast:

Want to hear some GREAT news? The same method used for tax can also be used to determine a tip!

Let's review what the steps are to find both tax and tip, then you can try a few problems:

To Find Tax or Tip

1. Find the total price of an item or bill.
2. Find the percentage of tax or tip and convert the percent to a decimal (Hint: Remember that "percent" means "per hundred").
3. Multiply the decimal times the total price to find the tax or tip amount.
4. Add the tax or tip amount to the total price.
5. Voila! You now have your total cost!

Here are two more examples:

Example 1

You are looking to buy a new video game. It is priced at $25.00 with 6% sales tax. How much money do you need to take with you to the store to buy it?

Total Price: $25.00

Tax Percent: 6% or .06 (move the decimal 2 places left)

Multiply to get total tax: .06 x $25.00 = $1.50

Add tax + total price: $1.50 + $25.00 = $26.50

The total cost of the game is $26.50, so make sure you have that exact amount when you head out to the store!

Example 2

You and four friends went to Chipotle for dinner, and the total came to $45.00. Your waitress was pretty good, so you plan to leave her a 15% tip. How much is needed to pay for the total and tip?

Total bill: $45.00

Tip Percent: 15% or .15 (move decimal 2 places left)

Multiply to get tip amount: .15 x $45.00 = $6.75

Add tip + total bill: $6.75 + $45.00

Total cost to pay bill and 15% tip is $51.75.

You may even take this one step further and decide how much you each owe if you want to split the bill evenly. Take a minute and see if you can figure out how much you each owe.

• Any ideas?

Look at the hints below if needed:

There are five people total (you + four friends), so we can take the total amount and divide by 5 to see how much each person should pay. Here's the work: $51.75 ÷ 5 = $10.35. Each person should pay $10.35 if you are splitting the bill and tip evenly.

Alright, time for you to try a few on your own. Go to the Got It? section for some practice.