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How Do Contract-Level Discounts Impact Taxes?

A quick view of how discounts affect the tax charged on your items.

Jake Scotto avatar
Written by Jake Scotto
Updated this week

This feature is available on all Goodshuffle Pro Plans.

Taxes in Goodshuffle Pro are calculated per line item. This gives you flexibility to apply multiple tax types (like Sales Tax and Admissions Tax) to all items or just select ones (e.g., only products, not services).

How Do Discounts Affect Tax?

When you apply a contract-level discount, Goodshuffle Pro distributes that discount proportionally across all line items. Each item is then taxed based on its discounted value.

Example 1: Standard Project

  • You have three items on a project, each with a 5% tax.

  • The subtotal is $600.

  • Tax = 5% of $600 = $30, so the total is $630.

Now, you apply a $150 contract-level discount.

  • That discount is 25% of the subtotal (150 ÷ 600 = 0.25).

  • Each item's taxable amount is reduced by 25%.

    • A $100 item is taxed as $75

    • A $200 item is taxed as $150, etc.

Tax drops from $30 to $22.50 — because it's now calculated on the discounted values.

Goodshuffle Pro applies a percentage of a contract level discount to each item on the order.

In this case, a $150 discount is 25% of the project's subtotal (150/600 = 25%).

With this 25% discount, my $100 item is now taxed as a $75 item, my $200 item is now taxed as a $150 item, etc.

Tax is now calculated on the new values of these items ($75.00 x 5% Tax, 150 x 5%, etc).

Example 2: With Line-Item Discount

  • One $100 item on your project is discounted 100% at the line-item level, not contract level

  • Remaining subtotal = $500

  • Tax = 5% of $500 = $25

The subtotal for this order is then $500, and with a 5% tax, the total is $525.

Now you apply the same $150 contract-level discount.

  • Discount is 30% of the adjusted subtotal (150 ÷ 500 = 0.30).

  • A $300 item is now taxed as $210

  • A $100 item is taxed as $70, etc.

You can see that the tax on the project was also reduced, from $22.50 down to $17.50.

Similar to example #1, Goodshuffle Pro applies a percentage of a contract level discount to each item on the order based off of the subtotal after the discounted line item.

In this example, a $150 discount is 30% of the order excluding the item that was discounted 100% (150/500 = 30%).

With this 30% discount, my $300 item is taxed as a $200 item, etc.


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