# Calculate Sales Tax on $1.25 Purchase - Effective Rate • chocolatelover In summary, sales tax is a percentage-based tax added to certain goods and services at the time of purchase. It is calculated by multiplying the purchase price by the sales tax rate, which varies by location and product. The effective rate of sales tax takes into account exemptions and deductions and is calculated by dividing the total tax paid by the purchase price. Sales tax differs from other types of taxes in that it is applied to specific goods and services and is paid directly by the consumer. For businesses, sales tax is an important source of revenue and failure to properly collect and report it can result in penalties. To calculate the sales tax on a purchase of$1.25, multiply the purchase price by the sales tax rate, which will give you the total
chocolatelover
Hi everyone,

## Homework Statement

A child is surprised that she must pay $1.40 for a toy marked$1.25 because of sales tax. What is the effective tax rate on this purchase?

## The Attempt at a Solution

I know that the difference between the two is .15. I could just guess and check, but is there a formula?

Thank you very much

Try thinking about how tax is computed.

1.25 * r = 0.15

Thank you very much

Regards

## Related to Calculate Sales Tax on $1.25 Purchase - Effective Rate ## What is sales tax and how is it calculated? Sales tax is a percentage-based tax that is added to the price of certain goods and services at the point of purchase. It is calculated by multiplying the purchase price by the sales tax rate, which varies by location and type of product or service. ## What is the effective rate of sales tax? The effective rate of sales tax is the actual percentage of tax paid on a purchase after taking into account any exemptions, deductions, or credits. It is calculated by dividing the total amount of tax paid by the total purchase price. ## How is sales tax different from other types of taxes? Sales tax is typically applied to specific goods and services, whereas other types of taxes such as income tax or property tax are applied to a person's total income or assets. Sales tax is also paid directly by the consumer at the time of purchase, rather than being deducted from a paycheck or billed separately. ## Why is sales tax important for businesses? Sales tax is an important source of revenue for governments, and businesses are responsible for collecting and remitting this tax to the appropriate authorities. Failure to properly collect and report sales tax can result in penalties and legal consequences for businesses. ## How can I calculate the sales tax on a purchase of$1.25?

The first step is to determine the sales tax rate in your location. Let's say the rate is 8%. To calculate the sales tax, multiply $1.25 by 8%, which equals$0.10. Therefore, the total cost of the purchase including sales tax is $1.35 ($1.25 + \$0.10).

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