How to Calculate Excise Tax

Figure excise tax using paper and pen.

An excise tax is a tax on the sale of a good, such as a new automobile, real estate or ammunition. The federal government or each state sets its own excise tax. Before you purchase a new vehicle, for example, learn how to manually determine excise tax based on the purchase price. The math is moderately easy and excise tax calculators are available to assist you, although it is not necessary to use a calculator to figure excise tax.

Step 1

Calculate excise tax based on purchase price. For example, if your state imposes an excise tax of 6 percent of a vehicle's purchase price, you would multiply the purchase price of the good by 6 percent. Subtract the result from the purchase price.

Step 2

Calculate excise tax based on a dollar amount. For example, if real estate is taxed at $1.50 per $100, and the purchase price of a piece of property is $130,000, then the excise tax is $1,950. The equation is $130,000 divided by 100, followed by $1,300 multiplied by $1.50. If the excise tax is $1 per each $500, and you purchase a vehicle at a cost of $2,000, the excise tax is $4.

Step 3

Calculate excise tax using an online calculator. Frequently, state websites and Department of Motor Vehicle websites offer free excise calculators. Plug in the required figures and obtain an estimate of excise tax.

Tip

The federal government imposes excise taxes on various fuels, bows and arrows, commercial air services, indoor tanning services and many other items.

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