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Sales Tax, Tips, and Discount Word Problems
- Math Only Math
- 7th Grade Math
- Sales Tax Word Problems
Sales tax, tips, and discounts are part of our everyday lives. When we shop for clothes, buy groceries, order food at a restaurant, or purchase school supplies, we often need to calculate percentages to find the final amount of money we have to pay.
In this lesson, we will learn how to solve sales tax, tip, and discount word problems using simple percentage calculations. These Grade 7 math problems will help you understand how percentages are used in real-life situations.
You will also find free practice worksheets with answers to help you improve your problem-solving skills.
Before learning about sales tax, tips, and discounts, review our lesson on how to calculate percentages . Understanding percentages will help you solve real-life percentage problems easily.
What You Will Learn
By the end of this lesson, you will be able to:
- Calculate sales tax on the price of an item.
- Find the total cost of an item after adding sales tax.
- Calculate a restaurant tip using a given percentage.
- Find the sale price of an item after a discount.
- Solve multi-step word problems involving tax, tips, and discounts.
- Apply percentage calculations to everyday shopping situations.
1. What Is Sales Tax?
Sales tax is an additional amount of money charged on certain goods and services when we buy them.
Sales tax is calculated as a percentage of the price of an item.
For example, if an item costs $100 and the sales tax rate is 6%, the sales tax is:
Sales Tax = 6% of $100
= (6/100) × 100
= $6
Therefore, the total cost of the item is:
Total Cost = Original Price + Sales Tax
= $100 + $6
= $106
Formula for Calculating Sales Tax
Sales Tax Formula
Finding Sales Tax Example:
A student buys a school bag for $50. The sales tax rate is 8%. Find the sales tax and the total cost of the bag.
Solution:
Original Price = $50
Sales Tax Rate = 8%
Step I: Calculate the sales tax.
Sales Tax = (8/100) × 50
= $4
Step II: Find the total cost.
Total Cost = $50 + $4
= $54
Answer: The sales tax is $4, and the total cost of the school bag is $54.
To improve your calculation skills, learn how to multiply decimal numbers .
2. What Is a Tip?
A tip, also called a gratuity, is an additional amount of money given to a service worker to show appreciation for their service.
For example, customers may leave a tip for a restaurant server after having a meal.
A tip is usually calculated as a percentage of the restaurant bill before sales tax in the examples in this lesson.
Formula for Calculating a Tip
Tip Formula
Calculating a Restaurant Tip Example:
A family has a restaurant bill of $60. They want to leave a 20% tip. Find the tip and the total amount they will pay before any additional tax.
Solution:
Restaurant Bill = $60
Tip Percentage = 20%
Step 1: Calculate the tip.
Tip = (20/100) × 60
= $12
Step 2: Calculate the total amount.
Total Amount = $60 + $12
= $72
Answer: The family should leave a $12 tip. Their total payment before any additional tax is $72.
3. What Is a Discount?
A discount is a reduction in the original price of an item.
Stores often offer discounts during seasonal sales, holiday sales, and special shopping events.
For example, if a jacket costs $80 and a store offers a 25% discount, the customer pays less than the original price.
Formula for Calculating a Discount
Discount Formula
Finding the Sale Price Example:
A pair of shoes costs $80. A store offers a 25% discount. Find the discount amount and the sale price.
Solution:
Original Price = $80
Discount Rate = 25%
Step 1: Calculate the discount.
Discount = (25/100) × 80
= $20
Step 2: Find the sale price.
Sale Price = $80 − $20
= $60
Answer: The discount is $20, and the sale price of the shoes is $60.
To practice more percentage calculations, try our percentage word problems and discount and percentage worksheets .
4. Finding the Final Price After Discount and Sales Tax
Sometimes a store offers a discount on an item and then charges sales tax on the reduced price.
In such cases, first calculate the discount and then calculate sales tax on the sale price.
Discount Followed by Sales Tax Example:
A bicycle has an original price of $200. A store offers a 10% discount. The sales tax rate is 6%. Find the final price of the bicycle.
Solution:
Original Price = $200
Discount Rate = 10%
Sales Tax Rate = 6%
Step I: Calculate the discount.
Discount = (10/100) × 200
= $20
Step II: Calculate the sale price.
Sale Price = $200 − $20
= $180
Step III: Calculate sales tax on the sale price.
Sales Tax = (6/100) × 180
= $10.80
Step IV: Calculate the final price.
Final Price = $180 + $10.80
= $190.80
Answer: The final price of the bicycle is $190.80.
5. Multi-Step Word Problems Involving Tax and Tips
Some real-life problems require us to calculate both sales tax and a restaurant tip.
Remember that in the following examples, the tip is calculated on the restaurant bill before tax.
Calculating Both Tax and Tip Example:
A family has dinner at a restaurant. Their food bill is $80. The sales tax rate is 5%, and they decide to leave an 18% tip on the original bill. Find the total amount they pay.
Solution:
Restaurant Bill = $80
Sales Tax Rate = 5%
Tip Rate = 18%
Step I: Calculate the sales tax.
Sales Tax = (5/100) × 80
= $4
Step II: Calculate the tip.
Tip = (18/100) × 80
= $14.40
Step III: Calculate the total payment.
Total Payment = Restaurant Bill + Sales Tax + Tip
= $80 + $4 + $14.40
= $98.40
Answer: The family pays $98.40 in total.
Quick Reference: Sales Tax, Tips, and Discounts
Sales Tax, Tip, and Discount Formulas
Use these formulas to solve real-life word problems involving sales tax, tips, and discounts.
| Type | Formula |
|---|---|
| Sales Tax | Price × Tax Rate 100 |
| Total Cost After Tax | Price + Sales Tax |
| Tip | Bill × Tip Rate 100 |
| Total Bill with Tip | Bill + Tip |
| Discount | Price × Discount Rate 100 |
| Sale Price | Price − Discount |
| Price After Discount and Tax | Sale Price + Tax |
Remember These Important Rules!
Sales tax is added to the taxable purchase price.
A tip is added to the restaurant bill.
A discount is subtracted from the original price.
When a discount is applied before sales tax, calculate tax on the discounted taxable price.
Always read the problem carefully to identify the amount on which the percentage is calculated.
7. Sales Tax, Tips, and Discount Word Problems Worksheet
Download
|
Now, practice solving the following Grade 7 percentage word problems. Read each question carefully and show your calculations.
Worksheet I: Sales Tax Word Problems
Solve the following word problems. Calculate the sales tax and the total cost. Show your working wherever necessary.
A notebook costs $12. The sales tax rate is 5%. Find the sales tax and the total cost.
Sales tax = $12 × 5/100 = $0.60
Total cost = $12 + $0.60
Answer: $12.60
A pair of sneakers costs $75. If the sales tax rate is 8%, how much sales tax will be charged? Find the final price.
Sales tax = $75 × 8/100 = $6
Total cost = $75 + $6
Answer: $81
A school bag costs $45. The sales tax rate is 6%. Find the total amount paid for the bag.
Sales tax = $45 × 6/100 = $2.70
Total cost = $45 + $2.70
Answer: $47.70
A customer purchases a bicycle helmet for $40. If the sales tax rate is 7.5%, find the sales tax and the total cost.
Sales tax = $40 × 7.5/100 = $3
Total cost = $40 + $3
Answer: $43
A video game costs $60. The sales tax rate is 9%. How much will the customer pay altogether?
Sales tax = $60 × 9/100 = $5.40
Total cost = $60 + $5.40
Answer: $65.40
Worksheet II: Tip Word Problems
Worksheet 2: Tip Word Problems
Find the tip and the total amount in each problem. Calculate the tip on the restaurant bill before tax.
A restaurant bill is $40. If the customer leaves a 15% tip, find the tip and the total amount before tax.
Tip = $40 × 15/100 = $6
Total amount = $40 + $6
Answer: Tip = $6; Total = $46.
A family has a meal costing $85. They decide to leave a 20% tip. How much is the tip?
Tip = $85 × 20/100
Tip = $17
Answer: $17.
A customer receives a restaurant bill of $50 and leaves an 18% tip. Find the total amount paid before tax.
Tip = $50 × 18/100 = $9
Total amount = $50 + $9
Answer: $59.
A restaurant bill is $120. If the tip is 15%, calculate the tip and the total amount before tax.
Tip = $120 × 15/100 = $18
Total amount = $120 + $18
Answer: Tip = $18; Total = $138.
A family spends $75 on dinner and leaves a 22% tip. Find the tip and the total amount before tax.
Tip = $75 × 22/100 = $16.50
Total amount = $75 + $16.50
Answer: Tip = $16.50; Total = $91.50.
Worksheet III: Discount Word Problems
Worksheet 3: Discount Word Problems
Calculate the discount and the final sale price. Show your calculations wherever necessary.
A jacket costs $100. The store offers a 20% discount. Find the discount and the sale price.
Discount = $100 × 20/100 = $20
Sale price = $100 − $20
Answer: Discount = $20; Sale Price = $80.
A pair of shoes costs $80. It is available at a 15% discount. Find the amount saved and the sale price.
Discount = $80 × 15/100 = $12
Sale price = $80 − $12
Answer: Amount Saved = $12; Sale Price = $68.
A bicycle costs $250. A store offers a 12% discount. Find the discounted price.
Discount = $250 × 12/100 = $30
Sale price = $250 − $30
Answer: $220.
A school backpack costs $60. During a sale, the store offers a 25% discount. Find the sale price.
Discount = $60 × 25/100 = $15
Sale price = $60 − $15
Answer: $45.
A tablet costs $400. A customer receives a 10% discount. How much does the customer save? Find the final price before tax.
Discount = $400 × 10/100 = $40
Sale price = $400 − $40
Answer: Amount Saved = $40; Sale Price = $360.
Need more practice? Try our percentage word problems worksheets to improve your percentage calculation skills.
Worksheet IV: Mixed Word Problem Answers
Worksheet 4: Mixed Word Problems
Solve the following real-life problems. Show all the steps. Calculate carefully and write the final answer with the correct unit.
A jacket costs $120. A store offers a 20% discount. The sales tax rate is 5%. Find the final price after discount and tax.
Discount = $120 × 20/100 = $24
Sale price = $120 − $24 = $96
Tax = $96 × 5/100 = $4.80
Final price = $96 + $4.80
Answer: $100.80
A family has a restaurant bill of $100. The sales tax rate is 6%, and they leave a 20% tip on the original bill. Find the total amount paid.
Tax = $100 × 6/100 = $6
Tip = $100 × 20/100 = $20
Total amount = $100 + $6 + $20
Answer: $126
A television costs $500. A store offers a 15% discount. If the sales tax rate is 8%, calculate the final price.
Discount = $500 × 15/100 = $75
Sale price = $500 − $75 = $425
Tax = $425 × 8/100 = $34
Final price = $425 + $34
Answer: $459
A customer buys a pair of shoes for $90 and a shirt for $40. The sales tax rate is 5%. Find the total amount paid.
Total before tax = $90 + $40 = $130
Tax = $130 × 5/100 = $6.50
Final bill = $130 + $6.50
Answer: $136.50
A family has a restaurant bill of $120. They leave an 18% tip and pay 5% sales tax on the bill. Find the total amount paid.
Tax = $120 × 5/100 = $6
Tip = $120 × 18/100 = $21.60
Total amount = $120 + $6 + $21.60
Answer: $147.60
A laptop costs $800. During a sale, the store offers a 10% discount. The customer also has a coupon for an additional 5% off the reduced price. Find the final price before tax.
First discount = $800 × 10/100 = $80
Reduced price = $800 − $80 = $720
Second discount = $720 × 5/100 = $36
Final price = $720 − $36
Answer: $684
A store sells a bicycle for $300. During a special sale, the price is reduced by 20%. The sales tax rate is 6%. Find the final amount paid.
Discount = $300 × 20/100 = $60
Sale price = $300 − $60 = $240
Tax = $240 × 6/100 = $14.40
Final amount = $240 + $14.40
Answer: $254.40
A customer purchases three identical shirts costing $25 each. The store offers a 10% discount on the total purchase. If the sales tax rate is 8%, find the final bill.
Original cost = 3 × $25 = $75
Discount = $75 × 10/100 = $7.50
Sale price = $75 − $7.50 = $67.50
Tax = $67.50 × 8/100 = $5.40
Final bill = $67.50 + $5.40
Answer: $72.90
8. Common Mistakes to Avoid
When solving percentage word problems, students sometimes make the following mistakes:
Mistake 1: Adding a discount instead of subtracting it.
A discount reduces the original price. Always subtract the discount amount.
Mistake 2: Calculating sales tax on the original price after a discount.
When the entire discounted item remains taxable, calculate sales tax on the reduced price, not the original price.
Mistake 3: Confusing the tip with sales tax.
A tip is an additional amount given for service. Sales tax is a tax charged on taxable purchases.
Mistake 4: Using the wrong amount to calculate a percentage.
Always identify the base amount before calculating a percentage.
Mistake 5: Forgetting to round money to the nearest cent.
For monetary answers, write amounts to two decimal places when appropriate.
Test Your Skills!
Sales Tax, Tips & Discounts Quiz
Test your skills with real-life money problems!
Frequently Asked Questions about Sales Tax, Tips, and Discount Word Problems
1. How do you calculate sales tax?
1. How do you calculate sales tax?
Answer:
Multiply the original taxable price by the sales tax rate expressed as a decimal. For example, 6% of $50 is $3. Add the tax to the price to find the total cost.
2. How do you calculate a 20% tip?
2. How do you calculate a 20% tip?
Answer:
Multiply the restaurant bill by 0.20. For example, a 20% tip on a $60 bill is $12.
3. How do you calculate a discount?
3. How do you calculate a discount?
Answer:
Multiply the original price by the discount rate expressed as a decimal. Subtract the discount from the original price to find the sale price.
4. Do you calculate sales tax before or after a discount?
4. Do you calculate sales tax before or after a discount?
Answer:
In the examples in this lesson, sales tax is calculated after the discount. However, actual tax treatment can depend on local tax rules and the type of discount.
5. How do you calculate the final price after tax and discount?
5. How do you calculate the final price after tax and discount?
Answer:
First, subtract the discount from the original price. Next, calculate sales tax on the discounted taxable amount. Finally, add the sales tax to the sale price.
6. What is the difference between a tip and sales tax?
6. What is the difference between a tip and sales tax?
Answer:
A tip is an additional payment given to a service worker, while sales tax is an amount collected on taxable purchases under applicable tax laws.
About Author
Written by Priyanka Ghosh
Mathematics Educator | Founder of Math Only Math
Priyanka Ghosh has been teaching elementary and middle-school mathematics for over 12 years and specializes in creating simple, child-friendly math lessons and worksheets.
Practice More Grade 7 Percentage Problems
Continue practicing with more percentage problems, worksheets, and real-life math applications. Understanding percentages will help you solve everyday financial problems more confidently.
Keep practicing, and remember: Mathematics becomes easier when you connect it with real life!
What to Learn Next
- Percentage of a Number
- Word Problems on Percentage
- Percentage Word Problems Worksheets
- More 7th Grade Math Problems
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