Take the discount first, then add tax
The order changes the total. Discount reduces the price, and tax is charged on that reduced price — so a markdown also shrinks the tax you owe. Taxing first would overcharge you.
$100 at 20% off is $80; 8% tax on $80 is $6.40; total $86.40. Taxing the full $100 first would have added $8, so the correct order saves the tax on the discounted portion.
Stacked discounts multiply — they don't add
- Sequential, not summed. "20% off plus an extra 10%" is $100 × 0.80 × 0.90 = $72, an effective 28% off, not 30.
- Order between two discounts. Two percentage discounts give the same result in either order, since multiplication commutes. It is only discount-vs-tax where the order matters.
- A dollar coupon is different. "$20 off" is a flat subtraction; whether it lands before or after a percentage coupon changes the total, so read the stacking rules.
Marked-down prices at common discounts
| Discount | $25 item | $50 item | $100 item |
|---|---|---|---|
| 10% | $22.50 | $45.00 | $90.00 |
| 20% | $20.00 | $40.00 | $80.00 |
| 25% | $18.75 | $37.50 | $75.00 |
| 30% | $17.50 | $35.00 | $70.00 |
| 50% | $12.50 | $25.00 | $50.00 |
Prices shown are before tax. Add your local sales-tax rate to the figure in the table, not to the original price.
Working backwards from the sticker
To check a "was $X" claim or price for a target margin, divide by what is left after the cut. A $60 sale tag at 40% off means $60 ÷ 0.60 = $100 was the original. To express "$20 off a $100 item" as a percentage, divide the saving by the original: 20 ÷ 100 = 20%.
Common questions
Is sales tax charged before or after a discount?
After. Tax applies to the discounted price you actually pay, not the original ticket price, which is the standard rule in most US states. A $100 item at 20 percent off is $80, and 8 percent tax on that is $6.40, for $86.40.
Why is 20 percent off then 10 percent off not 30 percent off?
The second discount comes off the already-reduced price, not the original. $100 times 0.80 is $80, then times 0.90 is $72, which is 28 percent off in total, not 30.
How do I find the original price from a sale price?
Divide the sale price by 1 minus the discount as a decimal. A $60 tag marked 40 percent off was $60 divided by 0.60, so $100 originally.
