How this number is made
A percent-off sign applies to the original price. Sales tax, where it exists, applies to what you actually pay for the item, which is the discounted price. Taking tax first and then discounting overstates the tax.
- Type the shelf price before the sale.
- Use the percent off, not the percent you still pay. 25% off means you pay 75%, not 25%.
- Add the local sales-tax rate if the register will. Zero is fine for states and items that are exempt.
Formula
Sale price = original × (1 − discount). You pay = sale price × (1 + tax rate).
Worked example
A $120 jacket at 25% off is $90. At 7% tax the register adds $6.30. You pay $96.30, not 25% off the taxed price.
Questions
How do two discounts stack?
Apply them one after another, not by adding the percents. Twenty percent off and then an extra 10% off is 0.8 × 0.9 = 0.72 of the original, which is 28% off, not 30% off. This form has one discount.
What about a fixed-dollar coupon?
Subtract the dollars from the price first, then run that remainder through this page with 0% off and your tax rate. Don’t convert the coupon to a percent unless you want to.