Calculating the Real Final Price After a Discount and Tax
The correct order is applying the discount first to get the sale price, then calculating tax on that discounted amount — as covered in the sales tax guide, this reflects that tax is generally charged on what was actually paid, not the original list price, and skipping this order produces a final total that's too high.
This is the same order-of-operations principle covered in the sales tax guide, applied here directly to the discount calculation itself.
A worked example
A $120 item at 25% off: the discount is $30, bringing the price to $90. Applying an 8% sales tax to that $90 discounted price adds $7.20, for a final total of $97.20 — noticeably less than the $9.60 in tax (and $129.60 total) that would result from incorrectly taxing the original $120 price.
Why getting the order right matters for budgeting
Estimating a final price using the wrong order overstates the actual cost, which can lead to under-buying (assuming an item costs more than it does) or simply an inaccurate personal budget — for anything with a meaningful discount and tax combined, working through both steps in the correct order gives a materially more accurate number.