How to Find Discount, Tax, and Tip? (+FREE Worksheet!)

How to find discount, tax, and tip, step by step. Each step says what to do and why it works, so you come away with a plan you can follow rather than a list of slogans.

Calculating discount, tax, and tip are among the most practical applications of percent math. Every time you shop, dine out, or read a receipt, you are dealing with these three calculations. This lesson shows you a clear method for each type, with worked examples you can follow and practice problems to check your understanding.

What Are Discount, Tax, and Tip?

All three involve applying a percent to an original price:

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• Discount — an amount subtracted from the original price (a price reduction).
• Tax — an amount added to the price by the government (sales tax).
• Tip — an amount added voluntarily for a service (gratuity).

How to Calculate Discount, Tax, and Tip

Calculating a Discount

Discount \(\color{blue}{\text{ Amount } = \text{ Original }}\) \(\color{blue}{\text{ Price } \times \text{ Discount }}\) Rate (as a decimal)
Sale \(\color{blue}{\text{ Price } = \text{ Original }}\) \(\color{blue}{\text{ Price } – \text{ Discount }}\) Amount

• 20% off $80: Discount = \(\color{blue}{0.20 \times 80 = $16}\). Sale price = \(\color{blue}{$80 – $16 = $64}\).
• Shortcut: Sale \(\color{blue}{\text{ Price } = \text{ Original } \times (1 – \text{ Discount Rate })}\) = \(\color{blue}{$80 \times 0.80 = $64}\).

Calculating Sales Tax

Tax \(\color{blue}{\text{ Amount } = \text{ Price } \times \text{ Tax }}\) Rate (as a decimal)
\(\color{blue}{\text{ Total } = \text{ Price } + \text{ Tax }}\) Amount

• $50 \(\color{blue}{\text{ item } + 8}\)% tax: Tax = \(\color{blue}{0.08 \times 50 = $4}\). Total = \(\color{blue}{$50 + $4 = $54}\).
• Shortcut: \(\color{blue}{\text{ Total } = \text{ Price } \times (1 + \text{ Tax Rate })}\) = \(\color{blue}{$50 \times 1.08 = $54}\).

Calculating a Tip

Tip \(\color{blue}{\text{ Amount } = \text{ Bill } \times \text{ Tip }}\) Rate (as a decimal)
\(\color{blue}{\text{ Total } = \text{ Bill } + \text{ Tip }}\) Amount

• 15% tip on $45: Tip = \(\color{blue}{0.15 \times 45 = $6.75}\). Total = \(\color{blue}{$45 + $6.75 = $51.75}\).

Step-by-Step Summary

1. Convert the percent to a decimal (divide by 100).
2. Multiply the decimal by the original price to find the percent amount.
3. For discounts: subtract the discount amount from the original price.
4. For tax and tip: add the amount to the original price.
5. Alternatively, use the shortcut multipliers: \(\color{blue}{1 – \text{ rate }}\) for discounts, \(\color{blue}{1 + \text{ rate }}\) for tax/tip.

Watch: Tax, Discount, and Tip Examples

Khan Academy walks through tax, discount, and tip calculations with real-world word problems:

Discount, Tax, and Tip – Worked Examples

Example 1 (Discount): A jacket costs $80. It is on sale for 20% off. What is the sale price?

Discount = \(\color{blue}{0.20 \times $80 = $16}\). Sale price = \(\color{blue}{$80 – $16 = $64}\).

Example 2 (Tax): A book costs $50, and the sales tax rate is 8%. What is the total cost?

Tax = \(\color{blue}{0.08 \times $50 = $4.00}\). Total = \(\color{blue}{$50 + $4 = $54.00}\).

Example 3 (Tip): A restaurant bill is $45. You want to leave a 15% tip. What is the total amount?

Tip = \(\color{blue}{0.15 \times $45 = $6.75}\). Total = \(\color{blue}{$45 + $6.75 = $51.75}\).

Example 4 (Combined): A $120 item is discounted 25%. After the discount, 7% sales tax is added. What is the final price?

Discount = \(\color{blue}{0.25 \times $120 = $30}\). Sale price = \(\color{blue}{$120 – $30 = $90}\). Tax = \(\color{blue}{0.07 \times $90 = $6.30}\). Final price = \(\color{blue}{$90 + $6.30 = $96.30}\).

More Practice: Percent Word Problems Video

The Organic Chemistry Tutor solves sales tax, discount, and original-price problems step by step:

Exercises for Discount, Tax, and Tip

Solve each percent word problem.

1. A $120 coat is 25% off. What is the sale price?
2. A $75 meal has 7% sales tax added. What is the total?
3. You leave a 20% tip on a $60 restaurant bill. What is the total?
4. A $200 TV is discounted 30%. What is the sale price?
5. A $40 purchase has 6% sales tax. What is the final cost?
6. An 18% tip on a $90 bill. What is the tip amount?

Answers

1. Discount = $30; Sale price = \(\color{blue}{$90.00}\)
2. Tax = $5.25; Total = \(\color{blue}{$80.25}\)
3. Tip = $12; Total = \(\color{blue}{$72.00}\)
4. Discount = $60; Sale price = \(\color{blue}{$140.00}\)
5. Tax = $2.40; Total = \(\color{blue}{$42.40}\)
6. Tip = \(\color{blue}{$16.20}\)

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Frequently Asked Questions

How do you calculate tax, tip and discount?

Change each percent to a decimal and multiply by the amount it applies to. For a $60 meal, 8% tax is 60 × 0.08 = $4.80, and a 15% tip is 60 × 0.15 = $9. For a discount, subtract: 20% off a $45 shirt saves 45 × 0.20 = $9, so you pay $36 before tax.

Do you calculate tax before or after a discount?

In most stores, the discount comes off first and sales tax is charged on the lower sale price. For a $50 jacket at 30% off with 6% tax, the sale price is 50 × 0.70 = $35, and tax is 35 × 0.06 = $2.10, so the total is $37.10. In math class, follow the order the problem describes.

Do you calculate tip before or after tax?

Many people figure the tip on the pre-tax total, though tipping on the after-tax amount is also common and simply gives a slightly larger tip. On a $40 bill with 7% tax, an 18% tip on the pre-tax amount is 40 × 0.18 = $7.20. In a word problem, read carefully to see which total the tip is based on.

What is the formula for finding a discount?

Discount = original price × discount rate, and sale price = original price − discount, or original price × (1 − rate). For a $120 game at 25% off, the discount is 120 × 0.25 = $30, and the sale price is $90. Using 120 × 0.75 = 90 gets you the sale price in a single step.

How do you find the tax after a discount?

Find the sale price first, then multiply it by the tax rate and add the tax to get the total. Example: $80 shoes are 15% off, so the sale price is 80 × 0.85 = $68. With 5% tax, the tax is 68 × 0.05 = $3.40, making the total $71.40. You can also multiply 68 × 1.05 to get the total directly.

How do you solve tax, tip and discount word problems?

Underline the starting amount and each percent, decide which amount each percent applies to, then work in order. Example: dinner costs $50, you have a $10 coupon, tax is 8% on $40 ($3.20), and you tip 20% on the $40 ($8). The total is 40 + 3.20 + 8 = $51.20. Always label each step so you can check it.

Related Topics

• Percent Problems
• Percent of Increase and Decrease
• Simple Interest
• Proportional Ratios
• Similarity and Ratios