Sales Tax and Change Back

Contributor: Erika Wargo. Lesson ID: 12641

If you want to buy a CD for $16.95 and you have $17.00, do you have enough to buy it? Depends on what state you are shopping in! Most states add sales tax, so you need to learn how to figure it out!

categories

Elementary

subject
Math
learning style
Visual
personality style
Otter
Grade Level
Intermediate (3-5), Middle School (6-8)
Lesson Type
Skill Sharpener

Lesson Plan - Get It!

Audio:

Lisa wants to buy a new pair of sneakers for $50. The sales tax is 4%. What is the sales tax amount she will pay for the pair of sneakers?

When you make a purchase, you are usually given a receipt, like the one pictured below.

  • What are some things you notice on the receipt?
  • What information do the different parts of the receipt tell us?

Discuss with a parent or teacher.

Image from Wikimedia Commons, Public Domain

A receipt contains information such as the name and address of the store, a list of items purchased, the price of each item, the subtotal, sales tax, and total including tax.

Sales tax is an amount, usually a percentage, added on to a purchase in some states. A receipt from your state may not show sales tax if your state does not have a sales tax. Sales tax is determined by each state and can be added onto a variety of items such as food, clothing, and games or toys, among other items. States use sales tax to pay for public services such as police, schools, roads, and other government services.

The amount before sales tax is called a subtotal. Some receipts will include the cash amount given to pay for the purchase and the amount of change received.

Since sales tax is usually given as a percentage, it needs to be changed to a decimal before you can calculate it on your purchase amount. To convert a percentage to a decimal, divide the percentage by 100. For example, if the sales tax is 5%, divide 5 by 100, and you will get 0.05.

Pay attention to these three concepts as you watch Calculating Sales Tax from Smith Math Academy.

  • How is a sales tax percentage changed into a decimal?
  • Does the sales tax increase or decrease the price of an item?
  • Why is it important to be able to calculate sales tax?

 

After the video, discuss with a parent or teacher how a sales tax of 4% would be changed to a decimal without using a calculator.

Example 1

Lisa wants to buy a new pair of sneakers for $50. The sales tax is 4%. What is the sales tax amount she will pay for the pair of sneakers?

Since the original price of the sneakers was $50, that is the subtotal. The sales tax is 4%, which is 0.04 as a decimal number.

To calculate sales tax, take the original amount, $50, and multiply it by the sales tax as a decimal, 0.04. Remember, when you multiply whole numbers and decimal numbers, you do not have to line up the decimal points.

2    
  $5 0
x 0.0 4
2 0 0
+ 0 0 0
$2. 0 0

 

After multiplying the digits, count the number of digits after the decimal point. In this example, there are two, so in your answer, you will move the decimal point to the left two times. The sales tax amount on $50 is $2.00. Add the subtotal amount and the sales tax amount to get your total:

$50 + $2 = $52

Now, what if you wanted to calculate the amount of change you would receive back if you paid with $100?

To calculate the change back, subtract the total amount of the purchase from amount of money you used to pay for the purchase: $100 - $52 = $48.

Lisa will get $48 back after she buys the sneakers.

Example 2

If you buy a laptop for $850.50 with a sales tax of 10%, what is the final price? If you pay with $1,000, how much change will you get back?

You can solve these problems using paper and pencil or a calculator. For this example, you will see how to use a calculator to solve for the sales tax amount.

Step 1 Enter the total, 850.50, and multiply it by the sales tax amount, 10% or .10. If you have a calculator with a % symbol, type in the 10 first, then tap the % key. The amount displayed is the sales tax amount. Write down this amount:

$850.00 x .10 = 85.05

Step 2 Add the subtotal, 850.50, and the sales tax amount, 85.05, to get your total including tax:

$850.50 + 85.05 = $935.55

This is the total amount that you owe. Write down this amount.

Step 3 To calculate the change back, subtract the amount you owe, $935.55, from the amount you are paying with, $1,000. Be sure to clear your calculator before subtracting these two amounts:

$1,000 - $935.55 = $64.45

This is the amount of change you will receive back.

Research with a parent or adult the sales tax for your state. What is your sales tax percentage as a decimal number? If your state does not have a sales tax, identify which states have the highest and lowest sales tax.

Now, you will practice calculating the sales tax and change back on different purchases as you play games and complete interactive practice in the Got It? section.

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