Economics · Lesson Plan
Classroom Economy: Taxes
Part of the MoneyInstructor-nomics classroom economy, this lesson introduces taxes by having students pay a 10% income tax on their classroom earnings and compute sales tax on purchases. Students learn the difference between income tax and sales tax, what services tax dollars pay for, the role of the IRS, and even tax deductions — then practice calculating 5%, 6%, and 7% sales tax.
For Teachers
Lesson at a glance
- Topic
- Economics
- Grade Level
- Grades 3–8
- Resource Type
- Lesson + Worksheet
- Estimated Time
- 45–60 minutes
- Format
- Lesson + activity
- Materials
- Printable lesson, activity sheet, whiteboard
What Students Learn
Learning objectives
- Give examples of services paid for by tax dollars
- Describe income tax and sales tax
- Identify the IRS and its role
- Make a classroom income-tax payment
- Calculate 5%, 6%, and 7% sales tax
Materials
What you’ll need
- Printed lesson and Lesson 8 activity sheet (one per student)
- MoneyInstructor-nomics income tax forms
- Classroom currency
- Calculator
- Whiteboard
Key Terms
Vocabulary
- Income tax
- An annual tax on the income of individuals by the state or federal government.
- Sales tax
- A local tax based on the cost of an item, collected from the buyer.
- IRS
- The U.S. agency responsible for collecting taxes and enforcing tax law.
- Progressive tax
- A tax whose rate rises with income.
- Tax deduction
- Something that reduces the income that will be taxed.
- Payroll deduction
- Tax withheld directly from a paycheck.
For Teachers
Lesson plan
Estimated time: one 45–60 minute class period (Lesson 8 of MoneyInstructor-nomics).
Lesson sequence
- What taxes pay for (10 min). Brainstorm services funded by taxes; define income tax and sales tax.
- Income tax (15 min). Explain progressive vs. flat tax and the IRS; demonstrate a 10% income tax on classroom earnings; students file the income tax form and pay.
- Deductions (5 min). Explain deductions and the good-deed deduction slips.
- Sales tax (15 min). Teach 5%, 6%, and 7% sales-tax calculation; students complete the activity sheet.
Assessment
Assess the completed income-tax form and the sales-tax activity sheet for correct calculations.
Discussion
Discussion questions
- What services are paid for by tax dollars?
- What is the difference between income tax and sales tax?
- What does the IRS do?
- What is a progressive income tax?
- How do you calculate a 6% sales tax on a purchase?
Printable Lesson & Activity
Classroom Economy: Taxes — Lesson & Activity Sheet
A printable MoneyInstructor-nomics lesson on income and sales tax: what taxes fund, the IRS, a 10% classroom income-tax payment, and 5-7% sales-tax practice.
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