The net discount calculation is an essential element of any financial transaction involving discounts. It represents the actual reduction in the price of a product or service after factoring in all applicable taxes and fees.
For example, a customer purchasing an item with a list price of $100 with a 20% discount might assume they will pay $80. However, if the applicable sales tax rate is 8%, the net discount would be $14.40, resulting in a final payment of $85.60.