Online Receipt Generator
Tax & Discounts

Invoice Discount Calculator

Apply a percentage or fixed discount to an invoice, then tax, and see the effective discount.

Result

Discount amount

$100.00

Effective discount

10%

Subtotal after discount

$900.00

Total tax

$0.00

Total

$900.00

Embed this calculator on your site

Copy this code and paste it into your page's HTML. The calculator is free to use and resizes itself to fit.

How it's calculated

The discount comes off the subtotal (a fixed discount can't exceed it), then tax is applied to the discounted subtotal. The effective discount shows a fixed discount as a percentage.

This invoice discount calculator takes a subtotal, applies a percentage or fixed discount, and then adds tax. You see the discount amount, the effective discount rate, the new subtotal, the tax and the total due.

The formula

discount            = subtotal x discount %      (percentage)
                    = fixed amount               (fixed, max = subtotal)
discounted subtotal = subtotal - discount
tax                 = discounted subtotal x tax rate
total               = discounted subtotal + tax
effective discount  = discount / subtotal x 100

Worked example

An invoice has a subtotal of $1,000. You give 10% off and charge 8% tax.

  • Discount amount: $100.00
  • Effective discount: 10%
  • Subtotal after discount: $900.00
  • Total tax: $72.00
  • Total: $972.00

The tax is $72, not $80. The discount lowers the amount that tax applies to.

How to read the result

Compare the effective discount with your margin. A 10% discount on a product with a 20% margin removes half of your profit.

Use the fixed amount type for a coupon or a goodwill credit. The effective discount line then shows what that amount means in percent.

The tool treats the discount as a reduction of the price. If you offer a discount for fast payment instead, use the early payment discount calculator. That discount applies only when the customer pays in time.

Tax treatment of discounts differs by country. Check it with your tax authority or an accountant.

On the invoice, list the discount as a separate negative line. The customer then sees the original price and the saving.

Related tools

Frequently asked questions

How do I calculate a discount on an invoice?
Multiply the subtotal by the discount percent and subtract it. A 10 percent discount on $1,000 removes $100 and leaves $900.
Is tax calculated before or after the discount?
This calculator applies tax to the discounted subtotal. Many businesses do the same, but rules vary by country. Confirm the correct method with your tax authority or accountant.
What is an effective discount?
It is the discount amount as a percentage of the original subtotal. A fixed $50 discount on a $500 subtotal is an effective discount of 10 percent.
Can a discount be larger than the subtotal?
No. The calculator caps the discount at the subtotal, so the discounted amount never goes below zero.
Should I use a percentage or a fixed discount?
A percentage scales with the order size. A fixed amount suits a goodwill credit or a coupon. Show the discount as its own line so the customer sees the saving.