Quick answer: add up your line items for the subtotal, apply any discount, then apply tax to the discounted amount. Use our free Invoice Calculator to compute this instantly.
The Correct Order of Operations
1) Sum all line items for the subtotal. 2) Subtract any discount. 3) Apply tax to the discounted amount, not the original subtotal — this is a common mistake that overcharges tax.
Why Order Matters
Applying tax before the discount results in charging tax on money the customer never actually paid, which is both mathematically wrong and can create compliance issues in some jurisdictions.
Frequently Asked Questions
Should tax apply before or after a discount?
After — tax should be calculated on the discounted amount, not the original subtotal.
Is this different from the Invoice Generator?
Yes, this tool calculates totals from numbers you provide; the Invoice Generator creates a full downloadable invoice document.
Can I use this for multiple line items with different tax rates?
This version applies one overall tax rate to the discounted subtotal.
✨ Try it now — free & instant
Open the Tool →