Invoice Calculator
Create invoices with line items, quantities, unit prices, discounts, and tax. Calculate subtotal, discount, tax, and total with a formatted invoice
Invoice Calculator
Calculator
Adjust values & calculateEnter your values below. Every result is computed in your browser โ no data is sent to any server.
Formula: Total = (Subtotal - Discount) + Tax | Tax = (Subtotal - Discount) x Tax Rate
Worked example โ Subtotal: $4,050 | Discount: -$405 | Tax: $291.60 | Total: $3,936.60
Formula
Total = (Subtotal - Discount) + Tax | Tax = (Subtotal - Discount) x Tax Rate
The invoice total is calculated by summing all line items (qty x unit price) for the subtotal, subtracting any percentage discount, then adding sales tax on the discounted amount.
Worked Examples
Example 1: Freelance Web Design Invoice
Problem:3 line items: Web Design ($2,500 x 1), Logo Design ($800 x 1), Content Writing ($150 x 5 pages). 10% discount, 8% tax.
Solution:Subtotal: $2,500 + $800 + $750 = $4,050 Discount (10%): -$405 After discount: $3,645 Tax (8%): +$291.60 Total: $3,936.60
Result:Subtotal: $4,050 | Discount: -$405 | Tax: $291.60 | Total: $3,936.60
Frequently Asked Questions
What should an invoice include?
A professional invoice should include: your business name and contact info, client's name and contact info, unique invoice number, invoice date and payment due date, itemized list of products/services with quantities and unit prices, subtotal, any applicable discounts, tax amount and rate, total due, payment terms (Net 30, due on receipt, etc.), and accepted payment methods. For tax compliance, include your business tax ID and the client's if required.
How do you calculate sales tax on an invoice?
Sales tax is calculated on the subtotal after discounts. Formula: Tax = (Subtotal - Discount) x Tax Rate. For example, on a $1,000 subtotal with 10% discount: discounted amount = $900, then at 8% tax: $900 x 0.08 = $72 tax, total = $972. Tax rates vary by state/locality (0-10%+ in the US). Some services may be tax-exempt. Always check your local tax regulations.
What are standard payment terms?
Common payment terms: 'Due on receipt' (immediate), 'Net 15' (15 days), 'Net 30' (30 days, most common), 'Net 60' (60 days, for larger clients), '2/10 Net 30' (2% discount if paid in 10 days, otherwise due in 30). For new clients, consider requiring upfront payment or 50% deposit. Late payment penalties typically range from 1-2% per month. Always clearly state terms on the invoice.
What is the difference between a trade discount and an early-payment discount?
A trade discount is deducted on the face of the invoice, so it reduces the subtotal before tax is computed, which is the sequence Invoice Calculator uses. An early-payment or settlement discount is conditional on the buyer paying within a window and is usually recorded when it is taken rather than baked into the original total. Because the two are recognised at different points, mixing them up distorts both the taxable amount and your receivables ledger.
How do I work out the implied cost of 2/10 net 30 terms?
The buyer forgoes a 2% discount to keep the money 20 extra days. The cost is the discount divided by the amount actually payable, 2 / 98 = 2.04% for those 20 days, and there are 365 / 20 = 18.25 such periods in a year, giving roughly 37% on a simple annualised basis. That is expensive credit, which is why buyers with cash usually take the discount and sellers use the term to accelerate collections.
What is nexus and why does it decide whether I charge sales tax?
Nexus is the connection between a seller and a taxing jurisdiction that creates an obligation to collect. It can arise from physical presence such as an office, staff or inventory, or from economic activity such as exceeding a sales threshold into that state. Without nexus you generally do not collect, and the buyer may owe use tax instead. Thresholds and rules differ by jurisdiction and change, so confirm your position with a tax professional before setting a rate here.
How should shipping, handling and expense reimbursements appear on the invoice?
List them as separate line items rather than folding them into the price of goods, so the client can see what they are paying for and so the amounts can be treated correctly for tax. Whether delivery charges are taxable varies by jurisdiction and sometimes by whether the charge is stated separately, which is another reason to itemise. Reimbursed expenses are usually shown at cost with any markup declared as its own line.
How do I invoice hourly work in this line-item structure?
Put the number of hours in the quantity field and your hourly rate in the unit price, so the line extends to hours times rate exactly as a goods line extends to units times price. Use one line per task or per phase rather than a single undifferentiated block, since itemised time is far easier for a client to approve and much stronger evidence if the amount is later disputed.
What is a credit note and when should I issue one instead of editing the invoice?
A credit note is a separate document that reduces or cancels an amount already invoiced. Once an invoice has been issued and entered in the client's records, altering it retrospectively breaks the audit trail and the sequential numbering that bookkeeping relies on. Issue a credit note referencing the original invoice number for returns, agreed reductions or billing errors, and issue a fresh invoice if a new amount is due.
How do deposits, retainers and progress billing fit into the total?
A deposit or retainer collected up front is shown as an amount already paid and deducted after tax has been computed on the full consideration, giving a balance due rather than a smaller taxable base. Progress billing instead splits the engagement into separate invoices for defined milestones, each taxed on its own value. Which approach applies affects when income is recognised, so keep the treatment consistent across a project.
References
Background & Theory
History
Reviewed for accuracy by Sahil, Senior Finance & Tax Editor ยท Editorial policy
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