How to Calculate the Difference in Tax Rates
Tax rates vary across the country and across the world. The differences in tax rates can save you money or, if you live in an area with higher rates, may cost you money. For example, if you live near a state border and one state charges a higher sales tax rate, it may be worth it for you to drive across the border to make major purchases because of the lower tax rate. In order to calculate the difference in tax rates, you need to know the two tax rates you are comparing.
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Instructions
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Determine the amount the tax is being levied on. For example, if you were comparing sales tax rates on your purchase, you would use the cost of the item you are buying.
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Multiply the first tax rate by the cost of the item you are buying. Continuing the example, if you bought a $1,000 computer and the first tax rate was 4.5 percent, you would multiply $1,000 by 0.045 to find the tax would cost $45.
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Multiply the second tax rate by the cost of the item that you are buying. In this example, if you bought a $1,000 computer and the second tax rate was 7.65 percent, you would multiply $1,000 by 0.0765 to find the tax would cost $76.50.
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Subtract the cost of the first tax from the second tax to find the difference in tax rates. In this example, you would subtract $45 from $76.50 to find that a 4.5 percent tax would save you $31.50 over a 7.65 percent tax rate. If you were to get a negative number, it would mean that the first tax rate would cost more than the second tax rate.
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References
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