Name: _________________________
Period: _____
Date: _________
Financial Planning and Money Management
Sales Tax a specified percent charged when merchandise is sold to the customer. Many state, country, and city governments charge a sales tax on certain items or services that you purchase. The sales tax rate is usually expressed as a percent and varies from state to state. Most stores give you a sales receipt as proof of purchase. The receipt shows the selling price of each item or service you purchased, the total selling price, the sales tax (if any), and the total purchase price.
Sales Tax Law (from the NJ Division of Taxation)
The New Jersey Sales and Use Tax Act imposes a tax of 7% upon the receipts from every retail sale of tangible personal property, digital property, and the sale of certain services, except as otherwise provided in the Act. Exempt items include: most unprepared food (except certain sweets such as candy or soft drinks and pet food), most clothing and footwear, disposable paper products for household use, prescription drugs, and over-the counter drugs. *Sales of clothing and accessories that are made of fur from the hide or pelt of an animal that is valued at $500 or more are subject to a 6% Fur Clothing Gross Receipts Tax.
Urban Enterprise Zones
New Jersey has established Urban Enterprise Zones in a number of economically depressed cities in the State. Within these zones, qualified businesses having a UZ-2 certificate may charge 3.5% sales tax on sales of merchandise qualified for the reduced rate. Step 1: Calculate the total selling price Step 2: Calculate the sales tax Sales Tax Amount = Sales Tax Rate * Total Selling Price Total Purchase Price = Total Selling Price + Sales Tax Amount *To Calculate the Selling price with the sales tax in one calculation Total Bill = Cost x 1.07 (for NJ 7% sales tax)
Sales Tax Practice Problems Examples:
Selling Price $ 656.25 Sales Tax Rate 5% Calculation 656.25 * .05 = 32.8125 Sales Tax Amount $ 32.81 Calculation 656.25 + 32.81 = 689.06 Total Purchase Price $689.06
Short Cut Version $ 656.25 $ 1,194.75 5% 7% Short Cut Version $ 1,194.75 $892.29 7% 4.5% Short Cut Version $892.29 4.5% 656.25 * 1.05 = 689.0625 $ 689.06
On Your Own - Find the sales tax and the total amount due for the following problems.
Selling Price $ 3,211.90 $ 1,500.25 $ 380.98 Sales Tax Rate 7% 8% 5.5% Sales Tax Amount Total Purchase Price
Short Cut Version
Selling Price $ 234.54 $ 867.75 $ 1,111.10 $ 1,800.33 Sales Tax Rate 7.5% 6% 8.75% 5% Total Purchase Price
Sales Tax Example Word Problem: Derek Jeter purchased a new cell phone for $199.99, a car charger for $19.99, and a case for $14.99. What is the total sales tax if he purchased the items in New York City that has a tax rate of 8.875%? Step 1: Calculate the total selling price (SUBTOTAL) - Add the total price of all taxable items Total Selling Price = $199.99 + $19.99 + $14.99 = $234.97 Step 2: Calculate the sales tax Sales Tax = Total Selling Price * Sales Tax Rate = $234.97 * .08875 = $20.85 1. Darrell purchased a new motorcycle that sold for $17,775. The state sales tax is 6%. What was the cost of the sales tax?
2. Mike bought an airline ticket for $747.46 and the sales tax is 7%. What was the subtotal, what was the sales tax amount and what was the total selling amount?
3. Eddie purchased 5 video games for $49.99 each. What is the total selling price including the sales tax if the tax rate is 6.5%?
4. Jenny bought a hat with a selling price of $14.95 and a sales tax rate of 7.25%. What is the sales tax and the total selling price?
5. Taylor bought a new Mercedes Benz for $65,643.65. What is the sales tax amount if the sales tax is 7%?
6. Susie went shopping in New Jersey and bought cold medicine for $12.99, bread for $2.99, and a gallon of milk for $3.99, and a 12 pack of soda for $5.99? What was the sales tax amount and the total selling price? Hint: You must first determine what is taxable.
7. Tommy purchases 4 boxes of cereal at 2 for $3.99, 10 cans of soup at $1.25 a can, 12 rolls of paper towels at $0.79 per roll, 2 boxes of diapers at $19.99, and 1 box of laundry detergent for $12.50. All items are taxable and the state sales tax is 4%, the county rate is 4.25%, and the city tax is 0.25%. What is the sales tax on the purchases and what is the total selling price?
