Tax on list or discounted price?

Acme sells widgets for $10. The sales tax rate is 10%. The great Memorial Day sales event features a 20% discount on widgets. Do you pay the tax on $8 or $10?

The Labor Day blowout event features a 20% rebate taken at the register. Do you pay the tax on $10 or $8?

Under what circumstances do you pay the tax on the list price rather than the discounted price?

3 Answers

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  • Fred
    Lv 5
    8 years ago
    Favorite Answer

    Sales Tax is based on the Cash register price. Discounts are taken before this, even if it's a coupon.

    Sales tax would be paid on the list (or cash register price) if the discount device is a "rebate", "gift certificate/card" or other cash like device.

    This is why "instant rebates" must be carefully worded and applied to actually be a coupon and not a traditional rebate.

  • Bobbie
    Lv 7
    8 years ago

    Look at your sales slip from the cashier and then you should have it correct RIGHT.

    If the are only charging you the reduced sales price at that time that would be the amount that the sales and use tax would be charged on RIGHT.

    When ever the items are purchased at the regular listed price with out and discount at all at the time of check out at the cash register for this purpose and time in your life.

    Hope that you find the above enclosed information useful. 03/04/2013

  • 8 years ago

    You pay tax on the amount you actually pay at the register, every time, no exceptions.

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