Tax & Discounts
How tax rates, per-item taxable flags, and discounts are calculated on invoices.
Tax Rate
Set a tax rate as a percentage on each invoice. For example, enter 8.5 for 8.5% tax. The tax rate defaults to whatever you’ve configured in Invoice Settings.
Per-Item Taxable Flag
In line items mode, each line item has a Taxable checkbox (checked by default). This lets you control which items are taxed:
- Taxable items — tax is calculated on these items
- Non-taxable items — excluded from tax calculation (e.g., a permit fee you’re passing through)
In fixed amount and percent-of-job modes, the entire amount is always treated as taxable.
Discounts
You can apply a discount to any invoice. Choose a discount type from the Discount Type dropdown:
- None — no discount (default)
- Percent — a percentage discount (e.g., 10% off)
- Fixed — a fixed dollar amount discount (e.g., $50 off)
The discount is applied to the subtotal before tax is calculated. The discount cannot exceed the subtotal.
Calculation Order
Invoice totals are calculated in this order:
- Subtotal — sum of all line items (quantity × unit price), or the fixed/percent amount
- Discount — subtracted from the subtotal
- Taxable amount — the portion of the subtotal that is taxable, after its share of the discount is deducted
- Tax — calculated on the taxable amount
- Total — subtotal − discount + tax
Example
Say you have two line items:
- Lawn mowing: 1 × $100.00 (taxable)
- Permit fee: 1 × $25.00 (not taxable)
With a 10% discount and 8.5% tax rate:
| Step | Calculation | Amount |
|---|---|---|
| Subtotal | $100 + $25 | $125.00 |
| Discount (10%) | $125 × 10% | −$12.50 |
| Taxable amount | $100 − ($12.50 × $100/$125) | $90.00 |
| Tax (8.5%) | $90 × 8.5% | $7.65 |
| Total | $125 − $12.50 + $7.65 | $120.15 |
The discount is proportionally distributed across taxable and non-taxable items.
Live Preview
As you adjust the tax rate, discount, or line items, the calculation preview on the invoice form updates in real time showing:
- Subtotal
- Discount (in red)
- Tax (with percentage shown)
- Total
Setting a Default Tax Rate
To avoid entering the same tax rate on every invoice, set a default in Settings > Invoice. See Invoice Settings.
Tips
- Tax is only calculated on taxable items. Use the per-item checkbox to exclude items like permit fees or deposits.
- The discount applies before tax, so you’re not taxing the discounted portion.
- If you set a 0% tax rate, no tax line appears on the invoice.
Related
- Creating Invoices — full guide to the invoice form
- Invoice Modes — how subtotals are calculated in each mode
- Invoice Settings — set your default tax rate