I'm here to give you insights about sales taxes and early payment discounts, @Cherokee99.
Sales tax calculations are only based on your customer's tax-exempt status, where you sell and where you ship, and what you sell. Hence, early payment discounts don't affect sales taxes. For more details about how QuickBooks Online calculates sales tax, refer to this article: Learn how QuickBooks Online calculates sales tax.
Let me also add these helpful articles to know more about setting up, editing, and deactivating your sales tax rate and settings:
When creating a transaction that has a discount on items, you can switch the tax rate and the discount section to adjust the calculation.
QuickBooks only follows the details you’ve entered and how you record them. Let me show you how:
Select the + New button.
Choose Invoice or Sales Receipt.
Add products and services.
Fill out the rest of the form including the discount as a percentage.
If you want to discount the total before you calculate sales tax, select the arrow icon next to the discount field.
When you're finished, select Save and send or Save and close.
I’ve also attached the screenshots for your visual reference:
Doing this will adjust the tax rate in the system. You can check this article for a detailed process on how to add the discount to sales forms. It includes creating a new product item if you want to give a set of discounts for set amounts.
For more insights on how to apply the tax rate to a transaction, edit payments and managing all your tax tasks in our new Sales Tax Center, you can visit this sales tax link.
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