Percent Off Then Tax
Apply a discount then a tax in that order and see both steps of the final price.
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Formula
How the calculation works
Applying a discount and then a tax means two multiplications in a fixed order: first the price falls by the discount, then the tax is charged on what is left. On 249 at 20% off the price drops to 199.20, and 8.5% tax on that adds 16.93, for 216.13.
Here is the part that surprises people. When the discount and the tax are both percentages of the running amount, the order does not matter: 249 times 0.8 times 1.085 equals 249 times 1.085 times 0.8. The order only changes the total when the tax is charged on the pre-discount price, which would give 220.37 instead, about four and a quarter more.
That distinction is the whole point of showing both steps. A receipt that discounts and then taxes is not the same as a tax charged on the listed price before any shop discount, and the gap grows with the size of the discount. Seeing the intermediate sale price makes it clear which base the tax actually landed on.
Common mistakes
- Adding the discount rate and the tax rate together and applying the net figure to the price, which treats two opposite changes as one.
- Assuming the order always changes the total. It does not when both are percentages of the running amount; it does only when the tax base is the pre-discount price.
- Charging tax on the pre-discount price and calling it the same as discount then tax, which quietly overstates the total.
When to use it
- Use it to price a discounted item that still carries tax, and to see the sale price and the tax line separately.
- It is not the tool for two discounts in a row; use the stacked discount calculator, which applies a second discount rather than a tax.
Worked example
249 at 20% off is 199.20; 8.5% tax adds 16.93, so you pay 216.13.
Common questions
What if the tax were charged first?
Many expect the order to change the total. When both are percentages of the running amount the product is the same either way. The gap appears only when the tax is charged on the pre-discount price, which gives 220.37 here.
What about a 100% discount?
The price is zero and so is the tax on it. A discount above 100% makes no sense, so the tool refuses it.
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