Sales Tax Formula:
From: | To: |
Sales tax is a consumption tax imposed by the government on the sale of goods and services. It's calculated as a percentage of the purchase price and collected by the seller at the point of sale.
The calculator uses the sales tax formula:
Where:
Explanation: The calculator multiplies the price by the tax rate to determine the tax amount, then adds this to the original price to show the total amount due.
Details: Accurate sales tax calculation is essential for businesses to comply with tax laws, for consumers to understand their total costs, and for financial planning.
Tips: Enter the price in dollars (without tax) and the tax rate as a decimal (e.g., 0.08 for 8%). All values must be valid (price > 0, tax rate between 0-1).
Q1: How do I convert a percentage tax rate to decimal?
A: Divide the percentage by 100. For example, 8% becomes 0.08.
Q2: Why do some locations have different tax rates?
A: Sales tax rates vary by jurisdiction (country, state, city) as they're set by local governments.
Q3: Are all items subject to sales tax?
A: No, some items like groceries or prescription drugs may be exempt in certain locations.
Q4: What's the difference between sales tax and VAT?
A: Sales tax is applied only at final sale to consumer, while VAT (Value Added Tax) is applied at each stage of production.
Q5: How often do sales tax rates change?
A: Rates can change annually or more frequently depending on local legislation.