Sales tax
Whenever we buy something from a store, we usually have to pay sales tax on top of our purchase. Sales tax is calculated as a percentage of the purchase price. The purchase price is the cost before adding sales tax. For example, when we buy a $100 bike where sales tax is 8%, the purchase price is $100. We pay the store $100 + 8% sales tax on the $100. So the total cost is $108.

Discount
Stores often offer sales or discounts. This is when the price you pay for an item is less than the original price. For example, when we buy a $100 bike that has a 15% discount where sales tax is 8%, the purchase price is $100 - 15% discount or $85. We pay the store $85 + 8% sales tax on the $85. So the total cost is $91.80.

Markup
Retail stores have to mark up their prices to make a profit (and to stay in business!). They will buy items at a lower price and sell it for a higher price. The difference between the two prices is the markup. For example, when a store buys bikes for $75 each and they mark it up by 30% to sell to their customers where sales tax is 8%, the purchase price for their customers is $75 + 30% markup or $97.50. The customers pay the store $97.50 + 8% tax on the $97.50. So the total cost is $105.30.

Example 1: Sales tax

Find the total costs asked for.
You wish to buy a sticker that costs $0.32 and a eraser that costs $0.54. The sales tax is 6%. What is the total cost?

To find the total cost of your purchase, first find the purchase price (cost before sales tax) and then add the sales tax.

Step 1:  Calculate the purchase price
Purchase price	=	Cost of the sticker + Cost of the eraser
	=	$0.32 + $0.54
	=	$0.86
Step 2:  Calculate the total cost by applying the sales tax
Total cost with sales tax	=	Purchase cost + Purchase cost × Sales tax percentage
	=	$0.86 + $0.86 × 6%
	=	$0.86 + $0.05
	=	$0.91

The answer is .

Example 2: Discount

Find the total costs asked for.
A store offers a 40% discount on a shirt that retails for $42. The sales tax is 9%. What does the shirt cost?

To find the total cost of your purchase, first find the purchase price (cost before sales tax) and then add the sales tax.

Step 1:  Calculate the purchase price
Purchase price	=	Cost of the shirt - Discount
	=	$42 - ($42)(40%)
	=	$42 - $16.80
	=	$25.20
Step 2:  Calculate the total cost by applying the sales tax
Total cost with sales tax	=	Purchase cost + Purchase cost × Sales tax percentage
	=	$25.20 + $25.20 × 9%
	=	$25.20 + $2.27
	=	$27.47

The answer is .

Example 3: Markup

Find the total costs asked for.
A store offers a 50% discount on a computer that was marked up by 15% from the original retail price of $364. The sales tax is 7.75%. What does the computer cost?

To find the total cost of your purchase, first find the purchase price (cost before sales tax) and then add the sales tax. Since the computer is marked up and then discounted, calculating the purchase price has 2 steps: calculate the marked up price and then apply the discount to the marked up price.

Step 1a:  Calculate the marked up price
Marked up price	=	Cost of the computer + Markup
	=	$364 + ($364)(15%)
	=	$364 + $54.60
	=	$418.60
Step 1b:  Calculate the purchase price by applying the discount
Purchase price	=	Marked up cost of the computer - Discount
	=	$418.60 - ($418.60)(50%)
	=	$418.60 - $209.30
	=	$209.30
Step 2:  Calculate the total cost by applying the sales tax
Total cost with sales tax	=	Purchase cost + Purchase cost × Sales tax percentage
	=	$209.30 + $209.30 × 7.75%
	=	$209.30 + $16.22
	=	$225.52

The answer is .