Do two discounts add together or multiply?

They multiply. A 25% discount followed by a 10% discount leaves you paying 0.75 times 0.90, or 67.5% of the original price — a 32.5% total saving, not 35%. Always apply the second percentage to the already-reduced price.

Is sales tax charged before or after a discount?

In most US states, tax is charged on the price after every discount and coupon has been subtracted. On the 250 appliance example above, the 40% discount brings the price to 150 first, and the 8.25% tax is then calculated on that 150, not on the original 250.

What does 'effective discount' mean if there's more than one markdown?

It is the actual percentage you saved once every markdown has been applied, before tax. On the jacket example, a 25% markdown plus a 10% till discount gives an effective discount of about 27.8%, even though the two headline numbers add up to 35%.

Why does a 50% off then 50% off sale not mean the item is free?

Because the second 50% applies to half the original price, not the original price itself. Two successive 50% discounts leave you paying 0.5 times 0.5, which is 25% of the ticket price — a 75% total saving, not 100%.

Does the order of the discount and the coupon change the final price?

No. Multiplying percentages together gives the same result regardless of order, so a 20% discount followed by a 10% coupon lands on the same final price as a 10% coupon followed by a 20% discount. What does change the result is whether a coupon is calculated on the original price or on the discounted price, which is a store policy question rather than a maths one.

How do I know if a 'was' price is real?

Check whether the item was actually sold at that price for a meaningful stretch of time recently, rather than for a token day or two before the sale started. Regulators in several countries require a genuine prior selling period before a retailer can advertise a discount off it, so a suspiciously large headline percentage is worth comparing against current prices elsewhere rather than taken at face value.

Discount and sale price calculator

A single percentage off a ticket price is easy to check in your head, but retailers rarely stop at one discount. A coupon on top of a clearance markdown, then sales tax on whatever is left, turns a simple subtraction into a chain of multiplications, and that chain almost never gives the same answer as adding the percentages together.

Why stacked discounts are smaller than they look

Retailers advertise 30% off and then let you apply a 20% loyalty coupon, and it is tempting to read that as 50% off. It is not. Each discount applies to whatever price is left after the previous one, so the combined effect is 1 minus 0.70 times 0.80, which is 0.44 — a 44% reduction, not 50%.

The gap grows with the size of the discounts. Two 10% discounts combine to 19%, not 20%, because the second 10% is taken off an already-reduced price. The more steps a promotion has, the more the true saving lags behind the sum of the percentages printed on the sign.

This is not a rounding quirk, it is the nature of sequential percentages, and it is why a store offering '20% off, plus an extra 10% at checkout' is quietly keeping a couple of points more margin than the headline suggests.

Two worked checkouts

An 80 jacket is marked 25% off, then a loyalty app knocks off a further 10% at the till, and the region charges 7% sales tax. The first markdown brings it to 60. The till discount takes 10% off that 60, landing on 54. Tax of 7% on 54 adds 3.78, so the card is charged 57.78 — a total saving of 22.22 against the original 80, or an effective discount of about 27.8%, not the 35% you would get by adding 25 and 10.

A 250 appliance is 40% off with no further coupon, in a state charging 8.25% tax. The discount alone brings the price to 150. Tax on that adds 12.38, for a final 162.38. The buyer saves exactly 100 off the ticket price, and here the effective discount before tax genuinely is 40%, because there was only one markdown to stack.

Comparing those two examples shows the rule cleanly: with a single discount, the percentage off the ticket price and the percentage you actually save are the same number. The moment a second discount or a coupon enters the chain, they diverge, and tax then applies to the smaller, already-discounted figure rather than the original price.

When 'percent off' calculations mislead you

The multiplication only tells the truth if every discount genuinely applies to the price left after the last one. Some in-store coupons instead apply to the original ticket price even after a markdown, which produces a bigger saving than the stacked formula predicts — always check the small print on which base price a coupon uses.

Loss-leader and 'was/now' pricing can also break the comparison entirely if the 'was' price was inflated or rarely charged. The saving looks larger than it is because the reference point is not a genuine prior price, so the correct response is to compare the final price to what competitors charge today, not to the store's own claimed original price.

Membership or bulk pricing structures sometimes apply a discount per unit rather than per basket, so running a single ticket price through this kind of calculation understates the saving on a multi-item order. Treat each pricing rule on its own terms rather than assuming every promotion stacks the same way.

Sales tax timing and regional differences

In most US states, sales tax is charged on the price after all discounts and coupons have been applied, so a bigger markdown also shrinks the tax bill. A handful of jurisdictions tax manufacturer coupons differently from store discounts because only the store discount actually reduces what the retailer receives, so the taxable amount can differ even when the shelf price looks identical.

Outside the US, value-added tax is usually already embedded in the shelf price rather than added at the register, so a discount shown on a UK or EU price tag is typically a discount on a tax-inclusive figure, and no further tax gets added at checkout the way sales tax is in most American states.

Clearance and end-of-season sales sometimes coincide with a change in the local tax rate at the start of a new tax year, so a discount calculated in December and the same discount calculated in January can land on a slightly different final price even if the store's percentages never change.

Frequently asked questions

Do two discounts add together or multiply?: They multiply. A 25% discount followed by a 10% discount leaves you paying 0.75 times 0.90, or 67.5% of the original price — a 32.5% total saving, not 35%. Always apply the second percentage to the already-reduced price.
Is sales tax charged before or after a discount?: In most US states, tax is charged on the price after every discount and coupon has been subtracted. On the 250 appliance example above, the 40% discount brings the price to 150 first, and the 8.25% tax is then calculated on that 150, not on the original 250.
What does 'effective discount' mean if there's more than one markdown?: It is the actual percentage you saved once every markdown has been applied, before tax. On the jacket example, a 25% markdown plus a 10% till discount gives an effective discount of about 27.8%, even though the two headline numbers add up to 35%.
Why does a 50% off then 50% off sale not mean the item is free?: Because the second 50% applies to half the original price, not the original price itself. Two successive 50% discounts leave you paying 0.5 times 0.5, which is 25% of the ticket price — a 75% total saving, not 100%.
Does the order of the discount and the coupon change the final price?: No. Multiplying percentages together gives the same result regardless of order, so a 20% discount followed by a 10% coupon lands on the same final price as a 10% coupon followed by a 20% discount. What does change the result is whether a coupon is calculated on the original price or on the discounted price, which is a store policy question rather than a maths one.
How do I know if a 'was' price is real?: Check whether the item was actually sold at that price for a meaningful stretch of time recently, rather than for a token day or two before the sale started. Regulators in several countries require a genuine prior selling period before a retailer can advertise a discount off it, so a suspiciously large headline percentage is worth comparing against current prices elsewhere rather than taken at face value.

Sources

Federal Trade Commission — Guides Against Deceptive Pricing — US federal guidance requiring a genuine former price before a retailer advertises savings against it, in force under 16 CFR Part 233.
GOV.UK — VAT rates — Standard UK VAT rate of 20% applied to most goods, published current rate as of 2025.