Sales Tax
The amount payable once a sales-tax or VAT rate is added to the price.
Formula
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Example
$50 with 8% tax: 50×1.08 = $54
How it works
This formula calculates the final amount you pay after a sales tax or VAT percentage is added to the original price. The term 1 + t means you are paying 100% of the price plus an extra t of that price as tax, so the whole amount is the original price scaled up by that factor. For example, a 10% tax means you pay 1.10 times the pre-tax price.
When to use it
Use this when you know the original price of an item or service and the tax rate, and you want the total cost including tax. It is common for shopping bills, restaurant checks, invoices, and online purchases.
Worked example, step by step
Pre-tax price = $80 Tax rate = 7% = 0.07 Total = Price × (1 + t) Total = 80 × (1 + 0.07) Total = 80 × 1.07 Total = $85.60
Common mistakes to avoid
- Using the percentage as 7 instead of converting it to 0.07
- Adding the tax rate to the price directly instead of multiplying by 1 + t
- Forgetting that 1 + t means the full price plus tax, not just the tax amount
Did You Know?
VAT is collected at each production stage, while a sales tax is charged only once at final sale.
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