A bill shows a subtotal of 150.00 and tax of 7.50. What percentage is the tax rate?

A bill shows a subtotal of 150.00 and tax of 7.50. What percentage is the tax rate?

• A. 3%
• B. 4%
• C. 5%
• D. 6%

Answer: (C)

Tax rate is found by dividing the tax amount by the subtotal and converting that ratio to a percent. Here, 7.50 ÷ 150 = 0.05, which is 5 percent. Since 150 × 0.05 = 7.50, the tax aligns perfectly with a 5% rate. If the rate were different, the tax would be different too—for example, 3% would yield 4.50, 4% would yield 6.00, and 6% would yield 9.00 on the same subtotal. Only 5% gives the exact 7.50 tax on a 150 subtotal.

Tax rate is found by dividing the tax amount by the subtotal and converting that ratio to a percent. Here, 7.50 ÷ 150 = 0.05, which is 5 percent. Since 150 × 0.05 = 7.50, the tax aligns perfectly with a 5% rate. If the rate were different, the tax would be different too—for example, 3% would yield 4.50, 4% would yield 6.00, and 6% would yield 9.00 on the same subtotal. Only 5% gives the exact 7.50 tax on a 150 subtotal.