Invoice Discount Calculator
Apply a percentage or fixed discount and see the new invoice total, with optional tax after the discount.
How is invoice discount calculator worked out?
An invoice discount reduces the subtotal before tax is calculated, so a discount lowers both the amount charged and the tax on it. The discounted total is the subtotal minus the discount, plus tax on what remains.
Invoice Discount Calculator
Discounted total
$2,700.00
- Customer saves
- $300.00
- Effective discount
- 10.00%
Show the working
| Subtotal | $2,500.00 |
| Discount | -$250.00 |
| Discounted subtotal | $2,250.00 |
| Tax at 20% (on discounted amount) | $450.00 |
| Discounted total | $2,700.00 |
Because tax is charged on the discounted amount, the customer also saves the tax that would have applied to the discount.
The question this calculator settles is whether tax goes before or after the discount. In almost every case it goes after — a discount reduces the value of the supply, so it reduces the tax with it — and applying tax first quietly overcharges the customer and overstates what you owe.
The formula
Percentage discount = subtotal × discount % ÷ 100
Discounted subtotal = subtotal − discount
Tax = discounted subtotal × tax rate (or subtotal × tax rate, if tax is applied first)
Total = discounted subtotal + taxThe toggle exists because a small number of situations do tax the undiscounted value — certain conditional or after-the-fact discounts, for instance. Unless you know yours is one of them, discount first.
Show the discount, do not hide it in the rates
A discount applied by quietly lowering the unit rates makes the concession invisible, which wastes it — the customer never registers that they were given anything, and your next invoice at the standard rate looks like a price rise. Showing the full value and a labelled discount line makes the gesture legible and keeps your standard pricing intact as the reference point.
Percentage or fixed amount
A percentage scales with the invoice, which is what you want for volume or loyalty concessions. A fixed amount is better for a specific, bounded gesture — a goodwill credit for a missed deadline, or a capped introductory offer — because it cannot grow unexpectedly on a larger invoice than you had in mind. Whichever you use, write the reason into the line description: a discount with no stated basis becomes the expected price.
Frequently asked questions
Is tax calculated before or after a discount?
After, in the normal case. A discount reduces the value of the supply, so tax is charged on the reduced amount and the customer saves the tax on the discount as well as the discount itself.
How do I calculate a percentage discount on an invoice?
Multiply the subtotal by the discount percentage as a decimal, then subtract the result. A 15% discount on a subtotal of 2,000 is 300, leaving 1,700 before tax.
Can a discount make an invoice negative?
It should not. If you owe the customer more than the invoice is worth, issue a credit note against the original invoice rather than creating a negative one — that keeps your numbering and your audit trail intact.
Put the number on an invoice
The free invoice generator builds the document around your figures — line items, tax, payment terms — and downloads a print-ready PDF. No signup required.
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