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How Should Sales Tax Be Calculated on Discounted Items?

In summary, the tax rate for a % off sale is the same as the regular tax rate for the item being purchased. You still have to pay tax on the original price of the item, regardless of any discounts applied. The tax is calculated after the discount is applied, which means the tax amount will be lower on a discounted item. All items are subject to tax during a % off sale, unless they are specifically exempt from tax. The discount and tax will be automatically applied at checkout, so no manual adjustments are necessary.
RossDeb2
Gold Member
388
I'm doing a 1/2 price sale. When a person buys certain products they will be charged half of the list price. Do I charge the tax on the item at the full priced value or at the reduced value? Thanks
 
I would think after the reduction.
 
RossDeb2 said:
I'm doing a 1/2 price sale. When a person buys certain products they will be charged half of the list price. Do I charge the tax on the item at the full priced value or at the reduced value? Thanks

If it is something PC is doing, then you charge tax on the reduced price. If it is a sale you are doing for your customers personally, you will either have to charge them the full tax or eat the difference since you will be charged tax on whatever price PC charges you for the item.
 

Related to How Should Sales Tax Be Calculated on Discounted Items?

1. What is the tax rate for a % off sale?

The tax rate for a % off sale is the same as the regular tax rate for the item being purchased. The discount does not affect the tax rate.

2. Do I still have to pay tax on the original price of the item?

Yes, tax must be paid on the original price of the item regardless of any discounts applied. The discount only applies to the final purchase price.

3. Is the tax calculated before or after the discount is applied?

The tax is calculated after the discount is applied. This means that the tax amount will be lower on a discounted item compared to the tax on the original price.

4. Are there any items that are exempt from tax during a % off sale?

No, all items are subject to tax during a % off sale, unless they are specifically exempt from tax in your state or country.

5. Do I need to apply the discount or tax at checkout?

The discount and tax will be automatically applied at checkout. You do not need to manually enter any codes or make any adjustments for the discount or tax.

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