The Real Price: Tax, Tips & Fees

What your kid learns

• Sales tax at the register

  Most places add sales tax when you pay. The rate depends on where you live. The price tag usually doesn’t show it.

• Tips are a percent

  A tip thanks someone for service, like a server at a restaurant. It’s a percent of the bill. Many people tip 15% to 20% at sit-down restaurants.

• Fees sneak in

  Delivery, service and shipping fees add up fast. They often show up at the very end, on the last screen before you pay.

• Quick tip math

  For 10%, move the decimal point one place left. For 20%, double the 10%. For 15%, add 10% plus half of that.

The story: Alex at the food truck

At a food truck, Alex learns that tax and a fee raise the $8 price.

1. Helper: Alex has $10 and a big appetite. The food truck tag says tacos are $8.
2. Alex: Perfect. $8 is under $10. Easy.
3. Seller: That’s $8, plus 50 cents sales tax. There’s also a $1 service fee.
4. Alex: So $8 plus 50 cents plus $1 is $9.50. That leaves only 50 cents for a tip.
5. Alex: Next time, I’ll do the math before I order.
6. Helper: The tag was $8. The real price was more. Tag plus tax, tip and fees is the real price.

The game: Food-truck order

Build a pretend lunch order that stays under $20, with tax included. Watch the real total, not just the tags.

Games use pretend money and work with taps or a keyboard. Nothing is timed.

New words

total cost

everything you really pay, including tax and fees

tip

extra money to thank someone for service

Also called: gratuity

fee

an extra charge, like for delivery or shipping

percent

out of 100, so 10% means 10 out of every 100

Questions at the end

• A pretend $20 item has $2 in sales tax. What do you pay?
• Your pretend bill is $30. What’s a 20% tip?
• At checkout, which line is a fee, not the item price?
• The tag says $15. Tax, tip and fees add $4. What’s the real price?
• You have $10. A pretend snack is $9, plus $1 tax and a 50-cent fee. Can you buy it?

Remember this

Tag + tax + tip + fees = the real price.

Talk about it

Look at a receipt together. What got added on top of the prices?

Try it at home: Circle the extras

1. With a grown-up’s OK, get a receipt. Or use Alex’s food-truck order: $8 tacos, 50 cents tax and a $1 fee.
2. Circle everything that isn’t the item price.
3. Add up the extras. How much did they add?

Circle everything on a receipt that isn’t the item price. Or use Alex’s food-truck order: $8 tacos, 50 cents tax and a $1 fee.

For grown-ups: live facts

• State and local sales tax rates

  Source: USA.gov(opens in a new tab)

School standards

• Grades 6–8
• National Standards for Personal Financial Education: Spending
• Common Core Math 7.RP.A.3