Practical guide
How to work out discounts and sales tax
A discount reduces the listed price. Sales tax is usually calculated after that reduction, using the discounted price as the taxable amount.
Find the discount amount
Convert the discount percentage to a decimal, then multiply it by the original price.
Discount = original price × (discount percentage ÷ 100)
For 20% off $65: $65 × 0.20 = $13.00 saved.
Find the sale price
Subtract the discount from the original price. You can also multiply by the percentage that remains.
$65 − $13 = $52.00
Shortcut: $65 × (1 − 0.20) = $65 × 0.80 = $52.00.
For an instant answer, open the Reverse Savings Tracker or view a worked answer such as 20% off $65.
Add sales tax after the discount
In a typical sale, first find the discounted price and then apply the local tax rate to that price. Tax laws and exemptions vary, so use the rate and taxable amount shown for your location.
Tax = discounted price × (tax rate ÷ 100)
At 8% tax: $52 × 0.08 = $4.16 tax.
Final total: $52 + $4.16 = $56.16.
The order matters
Do not simply subtract the discount rate from the tax rate. A 20% discount followed by 8% tax is not a 12% reduction, because the two percentages use different base amounts. On $65, that incorrect shortcut gives $57.20 instead of the correct $56.16.
Two discounts in a row
Successive discounts are applied one at a time. A 20% discount followed by another 10% discount is not 30% off. The first leaves 80% of the price; the second leaves 90% of that new amount. Together: 0.80 × 0.90 = 0.72, so the total reduction is 28%.