Tax goes on top
In many places, the price on the shelf is not all you pay. At the till a sales tax is added: a percent of the price, paid on top of it.
A football is marked $40 and the sales tax is 5%. 10% of $40 is $4, and 5% is half of that, $2. The till adds the $2 to the price: 40 + 2 = 42, so you pay $42.
The receipt lists the price, then the tax, then the total: $40 + $2 = $42.
The whole and a little more
The price is 100%. The tax adds 5% of the price on top, so you pay 100% + 5% = 105% of it. A discount takes a part of the price away; a tax adds a part on. That is why the total with tax is always more than the price.
Each part is 5% of the price, $2. The price is 20 parts; the tax adds one more part, making 21 parts, $42.
The rate can change
Sales tax rates are not the same everywhere. The rate depends on where you buy, and it can change from one year to the next. So always read the rate on the receipt before working out the tax.
Suppose the rate is 8%. 10% of $40 is $4, so 1% is $0.40, and 8% is 8 × $0.40 = $3.20. The same football now costs 40 + 3.20 = $43.20.
At 8%, the tax on $40 is $3.20, and the total is $43.20.
The tax or the total?
Read which amount the question asks for. The tax is only the part the till adds: $2 at 5%. The total is everything you pay: $42.
And the tax is never taken off the price. 40 − 2 = 38 treats the tax like a discount, but the till adds it on.