Tax, tips, markups and simple interest
Work out sales tax, tips, markups, sale prices, commission and simple interest, and find a price before tax from a total. Includes seven original questions with worked answers.
Turn the percent into a multiplier
Change the percent to a decimal by moving the decimal point two places left: 8% is 0.08, 18% is 0.18, 7.5% is 0.075.
To find just the extra amount, multiply by that decimal. To find the new total in one step, add it to 1 first: adding 8% means multiplying by 1.08. Taking off 20% means multiplying by 0.80.
Sales tax and tips
A $45 meal with an 18% tip: 45 × 0.18 = $8.10 tip, so you pay 45 + 8.10 = $53.10.
A $64 purchase with 7.5% sales tax: 64 × 0.075 = $4.80 tax, for a total of $68.80. Read the question closely. It may ask for the tax alone or the total, and it may say whether the tip is figured before or after tax.
Markups and sale prices use different starting amounts
A store buys a lamp for $40 and marks it up 35%: 40 × 1.35 = $54. Later the lamp goes on sale for 20% off: 54 × 0.80 = $43.20.
Going up 35% and then down 20% does not land on a simple answer, because each percent is taken of a different amount. Always ask: percent of what? Do one step at a time.
Commission
Commission is pay figured as a percent of sales. A salesperson who earns 4% commission on $12,500 in sales makes 12,500 × 0.04 = $500.
Simple interest: I = Prt
The formula sheet gives simple interest as I = Prt: interest equals principal (the starting amount) times rate times time. The time must be in years when the rate is per year.
$2,000 at 4.5% a year for 3 years earns 2,000 × 0.045 × 3 = $270 in interest, so the total is $2,270. For months, divide by 12 first: $1,200 at 6% for 18 months uses t = 1.5, so I = 1,200 × 0.06 × 1.5 = $108.
Work backward from a total
You paid $81 including 8% tax. What was the price before tax? The total is 1.08 times the price, so divide: 81 ÷ 1.08 = $75.
Taking 8% off $81 does not work, because the tax was 8% of the smaller price, not of the total. Check by going forward: 75 × 1.08 = 81.
Where this comes from
Where this comes from: GED Testing Service’s Assessment Guide for Educators: Mathematical Reasoning lists indicator Q.3.d, two-step percent problems such as simple interest, tax, markups and markdowns, tips and commission. The GED® math formula sheet lists I = Prt. We checked both on November 2, 2026.
These sources set the topic. The explanations, numbers and questions here are original FinishHigh practice with invented situations, not GED® test questions. GED® is a registered trademark of the American Council on Education. FinishHigh is independent and not affiliated with or endorsed by it. This lesson teaches one skill. It is not a full course or a readiness result.
For the basics of percent and discounts, start with Percentages without panic, linked below.
Your turn.
Try each question before opening the explanation. These are FinishHigh practice examples, not GED® test questions.
A haircut costs $32. You leave a 20% tip. How much is the tip, and what do you pay in all?
Show the answer and why
Tip: 32 × 0.20 = $6.40. Total: 32 + 6.40 = $38.40.
A chair costs $120 and sales tax is 6.25%. What is the tax and the total?
Show the answer and why
Tax: 120 × 0.0625 = $7.50. Total: $127.50.
A store pays $50 for a jacket and marks it up 60%. Later it is 25% off. What is the sale price?
Show the answer and why
$60. Marked-up price: 50 × 1.60 = $80. Sale price: 80 × 0.75 = $60.
You borrow $3,000 at 5% simple interest per year for 4 years. How much interest, and how much do you pay back in all?
Show the answer and why
Interest: 3,000 × 0.05 × 4 = $600. Total: 3,000 + 600 = $3,600.
Find the simple interest on $900 at 8% a year for 9 months.
Show the answer and why
$54. Nine months is 9 ÷ 12 = 0.75 year, so I = 900 × 0.08 × 0.75 = 54.
A total of $56.70 includes 5% sales tax. What was the price before tax?
Show the answer and why
$54. Divide by 1.05: 56.70 ÷ 1.05 = 54. Check: 54 × 1.05 = 56.70.
A salesperson earns 3% commission. Sales this month were $18,400. What is the commission?
Show the answer and why
$552. 18,400 × 0.03 = 552.
Trusted sources and further study
Sources guide the topics and factual information. The lesson wording, examples, and questions are original FinishHigh material.
- Math study booklet ↗GED Testing Service · checked 2026-10-07
- GED.com math formula sheet ↗GED Testing Service · checked 2026-10-07
- Math: GED Testing Service assessment targets for educators ↗GED Testing Service · checked 2026-10-21
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