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

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

Is tax applied before or after a discount?

Tax is applied to the sale price after the discount. You reduce the price first, then calculate tax on the discounted amount.

What is the shortcut for finding the sale price after a discount?

Multiply the original price by \(\color{blue}{(1 – \text{ discount rate })}\). For a 20% discount: \(\color{blue}{\text{ Price } \times 0.80}\).

How do I find the original price if I only know the sale price?

Divide the sale price by \(\color{blue}{(1 – \text{ discount rate })}\). For example, if the sale price is $64 after a 20% discount: \(\color{blue}{$64 \div 0.80 = $80}\).

Related Topics

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