How Tax is Calculated with a PromoCode or Shipping

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Issue:

What is the Order of Operations regarding Tax in Orders with or without Shipping and a PromoCode?

Solution:

Pre-Discount Tax vs Tax on Original Total without Shipping Charges
Pre-Discount Tax vs Tax on Original Total without Shipping Charges

If you check the “Apply Pre-Discount” option when adding tax, you are saying that tax will be applied to the original total, NOT the discounted total. As you can see below when the PromoCode is applied based on whether you have checked the “Apply Pre-Discount” Option and how that affects the total.

Please Note: The “Apply Pre-Discount” option is only available when using the Manual Tax Configuration. The Automatic Tax Calculation option will automatically apply the option where legally required per state. For more information on Automatic Tax Calculation vs Manual Tax Configuration, please see (KB link to new article here). If you need assistance with understanding tax laws for your location, please consult a tax professional before choosing your tax settings.



Pre-Discount Tax:
(Apply Pre-Discount Checked)



                                                                       
Cart Sub-Total$100
Tax %8%
Tax Total$8
Taxed Sub-Total$108
PromoCode$5 Off
Total Due$103



Post-Discount Tax:
(Apply Pre-Discount Unchecked)



                                                                       
Cart Sub-Total$100
PromoCode$5 Off
New Cart Sub-Total$95
Tax %8%
Taxed Total$7.60
Total Due$102.60


Pre-Discount Tax vs Tax on Original Total with Shipping Charges

What if you are also charging shipping? Whether or not the shipping is taxed will play a factor in these options.

Pre-Discount Tax with Taxed Shipping:
(Shipping/Apply Pre-Discount Checked)



                                                                                               
Cart Sub-Total$100
Shipping Sub-Total$10
Subtotal$110
Tax8%
Tax Total$8.80
Taxed Sub-Total$118.80
PromoCode$5 Off
Total Due$113.80



Pre-Discount Tax with Untaxed shipping:
(Apply Pre-Discount Checked, Shipping Unchecked)



                                                                                   
Cart Sub-Total$100
Tax %8%
Tax Total$8
Taxed Sub-Total$108
Shipping Total$10
PromoCode$5 Off
Total Due$113



Tax (Post-Discount) with Taxed Shipping:
(Apply Pre-Discount Unchecked, Shipping Checked)



                                                                                               
Cart Sub-Total$100
Shipping Sub-Total$10
Sub-Total$110
PromoCode$5 Off
Pre-Tax Total Due$105
Tax 8%
Taxed Total$8.40
Total Due$113.40



Tax (Post-Discount) with Untaxed Shipping:
(Apply Pre-Discount and Shipping Unchecked)



                                                                                   
Cart Sub-Total$100
PromoCode$5 Off
Tax8%
Tax Total$7.60
Taxed Sub-Total$102.60
Shipping Total$10
Total Due$112.60

Type: How To Publish Date: 6/26/2018 1:28:28 PM
Applies To: WebExpress, WebExpress Pro, PromoSearch, ShowLink Last Updated: 2/1/2022 1:18:22 PM
Platform: All Expiration Date:
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