How to Calculate Payable Sales Tax

Sales tax is added to clothing sales in most states.

In most states, consumers must pay a sales tax on purchased items such as cars, electronics, books and clothing. The tax rate varies from state to state--as does the items that are inclusive of the sales tax law. In some states, food and non-alcoholic beverage sales are excluded from sales tax, while other states do tax food and beverage items. When calculating sales tax, you should know the exact tax rate in the location where you are making the purchase.

Instructions

1. Determine the sales tax rate in your state. The Federal Tax Administration lists the current tax rates for each state in the country on their website. You can also contact your state's revenue department for information on the tax rate or visit their website. Many government websites will not only list the state tax rate, but information on local tax rates, as well.

2. Add any local tax to the state tax to get the total payable sales tax. The local tax rate should be based on the city or town where the sale occurs. To make the calculation easier, convert the percentages to numeric form by moving the decimal point over two places to the left. Therefore, a tax rate of 5% becomes 0.05.

3. Calculate the total sale price, making sure that any non-taxable items are excluded from the tax calculation. At the grocery store, for example, bread and milk are exempt from sales tax in many states. Shampoo, makeup and household items are taxable, however, and should be included in the sales tax calculation.

4. Multiply the total payable sales tax by the sales price--a calculation that is most easily done on a calculator. Remember that most cell phones have a basic calculator function. The percentage should be converted to a decimal if the calculator you are using doesn't have a percent function.

Tips & Warnings

• Multiplying the sales tax percentage by the total sale price will give you the amount of payable sales tax. If you want to calculate the grand total of the purchase price including the sales tax, convert the percentage to a decimal and add the number 1 before the decimal point. Therefore, 5.5 percent converts to 1.0055.

References

• Federal Tax Administration: State Tax Rates