Question

An item costs $4 before tax and $4.24 after sales tax. What is the sales tax rate?

Answer 1

Given in the question:

a.) An item costs $4 before tax.

b.) With sales tax, it became $4.24.

To be able to determine the sales tax rate, we first determine how much was the increase from before tax to with sales tax and divide it by the original cost multiplied by 100.

We get,

`\text{ Sales tax rate = }\frac{Cost\text{ with sales tax - Cost before tax}}{Cost\text{ before tax}}\text{ x 100}`
`\text{ = }\frac{\text{ \$4.24 - \$4}}{\text{ \$4}}\text{ x 100}`
`\text{ = }\frac{\text{ \$0.24}}{\text{ \$4}}\text{ x 100}`
`\text{ = 0.06 x 100}`
`\text{Sales tax rate = 6\%}`

Therefore, the answer is 6%.