ClassX Video Lessons Financial Literacy—Calculating Sales Tax | Learn how to figure out sales tax on purchases
Have you ever heard of sales tax? It’s a little extra money added to the price of things you buy, like toys or books. The person selling the item collects this money and gives it to the government. The government then uses this money to pay for important things like building roads, providing clean water, and paying teachers at schools.
Sales tax is a percentage of the price of an item. This means if you buy something, a small part of the price is the sales tax. The amount of sales tax can be different depending on where you live and what you’re buying. Some places don’t have sales tax at all, like Delaware, Alaska, Montana, New Hampshire, and Oregon. In other places, the sales tax can be between 4% and 9%. Sometimes, things like groceries and medicines don’t have sales tax.
Let’s learn how to calculate sales tax with our friend, Frankie Finance. Frankie wants to buy a book that costs $5 before sales tax. She has $6 and wants to make sure she has enough money to buy the book after adding sales tax.
Frankie finds out that the sales tax is 8.25%. To calculate the total cost, she first changes the percentage to a decimal: 8.25% becomes 0.0825. Then, she adds 1 to this decimal: 1 + 0.0825 equals 1.0825. Next, she multiplies the book’s price by this number: $5 times 1.0825 equals $5.4125. Finally, she rounds this number to $5.41. So, the sales tax on the $5 book is $0.41.
Great news! Since Frankie has $6, she can buy the book!
You can try this at home! Find out what the sales tax rate is where you live. Then, use this information to calculate the sales tax on different items. This is a fun way to learn about money and something cool to share with your family and friends.
Hope you enjoyed learning about sales tax! Keep exploring and learning new things every day!
Sales Tax Shopping Adventure: Pretend you are going on a shopping trip with a budget of $10. Choose three items you would like to buy, such as a toy, a book, and a snack. Use the sales tax rate from your area to calculate the total cost of each item, including sales tax. Add up the total cost to see if you can buy all three items with your $10. Share your shopping list and calculations with a family member or friend!
Sales Tax Detective: Become a sales tax detective by observing receipts from recent purchases made by your family. Look for the sales tax amount on each receipt and compare it to the total price of the items bought. Discuss with your family why sales tax is important and how it helps your community. Write down your findings and share them with your class.
Role-Playing Store: Set up a mini-store at home with items like toys, books, or snacks. Assign prices to each item and decide on a sales tax rate. Take turns being the shopkeeper and the customer with a family member or friend. As the shopkeeper, calculate the total cost including sales tax for each purchase. As the customer, check if you have enough pretend money to buy the items. This activity will help you practice calculating sales tax and making purchases.
Sure! Here’s a sanitized version of the transcript:
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**Financial Literacy for Kids: Part Six – Calculating Sales Tax**
Have you ever heard of sales tax? Sales tax is a tax charged whenever a good or service is sold. The seller collects the tax from the buyer and then gives it to the government. The government uses this tax to pay for things like new roads, water lines, or even to pay public school teachers.
Today, we are going to learn more about sales tax and how to calculate it. This will help you become more financially literate, which means using certain skills to manage money wisely.
Here’s an interesting fact: the states of Delaware, Alaska, Montana, New Hampshire, and Oregon do not have a state sales tax.
Now that we know what sales tax is, let’s talk about how it is determined or calculated. Sales tax is calculated as a percentage of the purchase price of an item, and this rate changes depending on the state you live in and the item you are purchasing. Generally, sales tax ranges from about 4% to around 9%. Sometimes, depending on where you live, items like groceries and some prescription medications are exempt from sales tax.
Let’s find our friend Frankie Finance and see if we can help her figure out how to calculate sales tax. Frankie wants to buy a book that costs $5, which is the price before sales tax. She has $6 total, so she wants to make sure she has enough money to buy the book once sales tax is added.
After some research, Frankie finds out that the sales tax for the book is 8.25%. First, she needs to convert the sales tax percentage to a decimal: 8.25% equals 0.0825. Next, she needs to multiply the price of the book by 1 plus the decimal she just calculated: 1 + 0.0825 equals 1.0825. So, she will multiply $5 by 1.0825, which equals $5.4125. Finally, she rounds this number to the nearest hundredth, giving her the total cost of the book, which is $5.41. Therefore, the sales tax on the $5 book equals $0.41.
Kind of a cool trick, right? Since Frankie has $6, she can afford to buy the book!
What great news! You can try this at home. Do some research to figure out what the sales tax rate is where you live. With this information, you can calculate the sales tax on many different items. This will help you become more financially literate and is also something interesting you can share with your family and friends.
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Hope you had fun learning with us! Visit us at learn.org for thousands of free resources and turnkey solutions for teachers and homeschoolers.
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This version maintains the educational content while removing any informal language or unnecessary details.
