Invoice with tax
Add VAT, GST or sales tax at whatever rate applies, including the awkward ones like 8.875%. The tax appears as its own line, calculated on the discounted amount, and the totals are exact to the cent.
Invoice
Fill in the form above and this invoice updates as you type.
From
Your name and address
Bill to
Client name and address
| Description | Qty | Unit price | Amount |
|---|---|---|---|
| No line items yet. | |||
When you actually have to charge tax
Registration comes before charging, everywhere. In the UK you register for VAT once your taxable turnover passes the threshold — £90,000 over a rolling twelve months as it stands — and you must not add VAT to an invoice before you are registered. In the EU each member state sets its own registration threshold and its own rates. In the United States the question is not turnover but nexus: since the Supreme Court decided South Dakota v. Wayfair in 2018, states can require sales-tax collection from sellers with no physical presence at all, on thresholds that differ state by state.
What is taxed differs as much as who has to charge it. Most US states tax goods and exempt many services, but the list of taxed services grows every year and varies wildly between states. VAT and GST systems generally tax services as readily as goods. Getting this wrong in the safe direction — charging tax you did not have to collect — is not safe at all: you have taken money from a customer that you now have to account for or return.
Cross-border business-to-business supplies inside the EU are the common special case for freelancers: under the reverse charge, you invoice without VAT and the customer accounts for it at their end, but your invoice must state that the reverse charge applies and carry both VAT numbers. An invoice missing that line is not a valid VAT document for the client who has to rely on it.
Discount first, then tax — and the difference is real money
When an invoice carries both a discount and a tax rate, the order they are applied in changes the total. This tool subtracts the discount first and taxes what remains, which is not a preference: tax is due on the consideration actually received, and an unconditional discount reduces the taxable amount. That is explicit in UK VAT guidance, in Article 79 of the EU VAT Directive, and in most US state rules on seller discounts.
The arithmetic makes it concrete. Three hundred units of work at 10.00 is 3,000.00. A ten per cent discount takes it to 2,700.00, and 20% tax on that is 540.00, for a total of 3,240.00. Taxing the undiscounted 3,000.00 instead would produce 600.00 of tax and a total of 3,300.00 — sixty pounds or dollars of tax charged on money that nobody ever paid, which you would then be holding on behalf of a tax authority that is not owed it.
The exception, for completeness, is a discount funded by somebody else — a manufacturer's rebate where the seller still receives the full amount. There the taxable base does not drop, because the consideration did not. That is out of scope for a free tool, and any business in that position has an accountant who has already told them so.
What a tax invoice has to show
More than the total. A valid tax invoice shows the net amount, the rate applied, the tax as its own figure, the gross total, and your tax registration number. Your customer needs every one of those to reclaim the tax, and an invoice missing any of them can be rejected by their tax authority long after you have been paid and moved on.
Where different rates apply to different items, each rate needs its own subtotal. This tool applies a single rate to the whole invoice, which covers the great majority of small-business invoicing but not a mixed basket of standard-rated and zero-rated goods. If that is your situation you need per-line tax codes, and a free browser tool that pretended otherwise would be doing you harm rather than a favour.
One rounding, on the invoice total, is what you will see here. Rounding the tax line by line and adding the results is also permitted in the EU, but it drifts from the invoice-level figure by a cent or two on a long invoice — and your client's accounting system almost always recomputes from the total, which makes the invoice-level figure the one that matches.
The order, worked out in full
Three hundred units at $10.00, less ten per cent, plus twenty per cent tax — the same invoice calculated both ways.
| Step | Discount first (used here) | Tax first |
|---|---|---|
| Subtotal | $3,000.00 | $3,000.00 |
| Discount | −$300.00 | −$300.00 |
| Taxable amount | $2,700.00 | $3,000.00 |
| Tax at 20% | $540.00 | $600.00 |
| Total | $3,240.00 | $3,300.00 |
The $60.00 difference is tax charged on money nobody paid. It is not yours to keep and not theirs to reclaim, which is why the order is a rule rather than a preference.
Common rates on a $99.99 invoice
| Rate | Tax | Total |
|---|---|---|
| 5% | $5.00 | $104.99 |
| 7.25% | $7.25 | $107.24 |
| 8.875% | $8.87 | $108.86 |
| 19% | $19.00 | $118.99 |
| 20% | $20.00 | $119.99 |
| 21% | $21.00 | $120.99 |
| 23% | $23.00 | $122.99 |
Rounded to the cent once, on the whole taxable amount. 8.875% is New York City's combined state and local rate; 7.25% is California's statewide minimum; 23% is the standard rate in Ireland and Poland.
Common questions
Is tax calculated before or after the discount?
After. The discount comes off the subtotal first and the tax rate is applied to what is left, because tax is owed on the amount actually paid. Taxing the pre-discount figure would over-collect and leave you holding tax nobody owes.
Can I use a rate like 8.875%?
Yes — that is New York City's combined rate, and fractional rates are handled exactly. Rates are held to four decimal places internally and the tax is rounded to the cent once, on the whole taxable amount.
Can I put two different tax rates on one invoice?
Not here. This tool applies one rate to the whole invoice, which covers most small-business invoicing. A mixed-rate invoice needs per-line tax codes, and that is properly the job of accounting software rather than a browser page.