How do I calculate the total on an invoice with tax and discount?

First sum all line items (qty × price) to get the subtotal. Apply your discount percentage to the subtotal to get the after-discount amount. Then apply the tax rate to the after-discount amount. Add the tax to the after-discount amount to get the invoice total. Our invoice calculator does this automatically.

How do I calculate late payment interest on an overdue invoice?

Multiply the outstanding balance by the daily interest rate and the number of days overdue. For example, if the balance due is $3,000, the annual rate is 12% (daily rate = 0.0329%), and the invoice is 30 days overdue, the interest is $3,000 × 0.000329 × 30 = $29.59. Our late payment interest calculator handles this automatically.

Should I apply discount before or after tax?

Always apply the discount before calculating tax. Tax should be computed on the actual amount being charged (the after-discount amount), not the original subtotal. This is the standard accounting practice and is how our invoice calculator works.

What is a typical late payment interest rate for invoices?

Common late payment rates range from 1% to 2% per month (12% to 24% annually). In the US, many states cap late fees. The EU Late Payment Directive sets the rate at the ECB reference rate plus 8 percentage points. Always check your local regulations and include the rate in your payment terms.

How do I calculate balance due after a deposit?

Calculate the full invoice total (subtotal minus discount, plus tax), then subtract the deposit amount. The result is the balance due — the remaining amount the client owes. Our invoice deposit calculator shows this breakdown clearly.

Invoice Calculator

Creating accurate invoices means getting the math right on every line item, discount, tax rate, and deposit. Our invoice calculator handles the entire workflow: add unlimited line items with description, quantity, and unit price; apply a percentage discount to the subtotal; compute tax on the after-discount amount; subtract any deposit already paid; and display the final balance due. For overdue invoices, the built-in late payment interest calculator lets you enter days overdue and a daily interest rate to compute the additional interest owed and the new total. Whether you are a freelancer billing a client, a contractor sending a progress invoice, or a small business owner reconciling accounts receivable, this tool eliminates arithmetic errors and saves time.

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calendar_today Updated: April 2026

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receipt_long Line Items

tune Invoice Settings

Discount %

Tax Rate %

Deposit / Advance Payment

schedule Late Payment Interest

Days Overdue

Annual Rate %

summarize Invoice Summary

Subtotal $0.00

Discount (0%) −$0.00

After Discount $0.00

Tax (0%) $0.00

Total $0.00

Deposit Paid −$0.00

Balance Due $0.00

Input Values

Line Items

Discount %

Tax Rate %

Deposit Amount

tips_and_updates Tips

• Always apply the discount before calculating tax — tax should be computed on the after-discount amount, not the original subtotal
• Include a clear payment due date on every invoice so you can accurately calculate late payment interest if needed
• Standard late payment interest rates range from 1% to 1.5% per month (0.033% to 0.049% per day) — check your local regulations
• For recurring freelance clients, consider requiring a 25-50% deposit upfront to improve cash flow and reduce late payment risk
• Keep line item descriptions specific — 'Web design - homepage' is easier to dispute-proof than just 'Design work'
• Many jurisdictions require invoices to show tax as a separate line item — this calculator does that automatically
• Save your invoice calculations as PDF screenshots for your accounting records

How to Use This Calculator

Add line items

Enter a description, quantity, and unit price for each item or service on the invoice.

Apply discount

Enter a discount percentage if applicable — the discount is applied to the subtotal before tax.

Set tax rate

Enter your applicable tax rate. Tax is calculated on the after-discount amount.

Enter deposit

If the client has already paid a deposit, enter it to see the remaining balance due.

Calculate late interest

For overdue invoices, enter the days overdue and annual interest rate to compute the late payment interest.

The Formula

First, sum all line items (quantity × unit price) to get the subtotal. Apply the discount percentage to get the after-discount amount. Compute tax on the after-discount amount. Add tax to get the total. Subtract the deposit to find the balance due. For late payments, multiply the balance due by the daily interest rate and the number of days overdue to get the interest charge.

Subtotal = Σ(Qty × Price)  |  Discount = Subtotal × Discount%  |  After Discount = Subtotal − Discount  |  Tax = After Discount × Tax%  |  Total = After Discount + Tax  |  Balance Due = Total − Deposit  |  Late Interest = Balance × Daily Rate × Days Overdue

lightbulb Variables Explained

Qty Quantity of each line item
Price Unit price of each line item
Subtotal Sum of all line item amounts (qty × price)
Discount% Percentage discount applied to the subtotal
Tax% Tax rate applied after discount
Deposit Amount already paid as a deposit
Balance Due Total minus deposit — the remaining amount owed
Daily Rate Daily interest rate for late payment (annual rate ÷ 365)
Days Overdue Number of days past the payment due date

tips_and_updates Pro Tips

Always apply the discount before calculating tax — tax should be computed on the after-discount amount, not the original subtotal

Include a clear payment due date on every invoice so you can accurately calculate late payment interest if needed

Standard late payment interest rates range from 1% to 1.5% per month (0.033% to 0.049% per day) — check your local regulations

For recurring freelance clients, consider requiring a 25-50% deposit upfront to improve cash flow and reduce late payment risk

Keep line item descriptions specific — 'Web design - homepage' is easier to dispute-proof than just 'Design work'

Many jurisdictions require invoices to show tax as a separate line item — this calculator does that automatically

Save your invoice calculations as PDF screenshots for your accounting records

Getting Invoice Math Right Every Time

Accurate invoicing is the backbone of healthy business cash flow, yet arithmetic errors on invoices are surprisingly common — and costly. A single misplaced decimal or incorrectly applied tax rate can lead to underbilling (lost revenue), overbilling (damaged client trust), or tax reporting discrepancies that trigger audits. A proper invoice calculation follows a specific sequence: first, compute line item totals (quantity times unit price); then sum them into a subtotal; apply any discounts to that subtotal; calculate tax on the post-discount amount (not the original subtotal — a frequent mistake); subtract deposits or advance payments already received; and arrive at the balance due. For freelancers and small businesses, late payment is an additional concern: according to Fundbox research, 64% of small businesses have unpaid invoices more than 60 days old. Late payment interest, typically calculated as a daily or monthly rate on the overdue amount, incentivizes timely payment and compensates for the time value of money. Standard late fee rates range from 1% to 2% per month (12-24% annually). Having a reliable system to calculate every component — line items, discounts, taxes, deposits, and interest — eliminates errors and helps you get paid faster.

How to calculate an invoice total step by step

An accurate invoice starts with correct line items. Multiply each item's quantity by its unit price, then sum all line amounts to get the subtotal. If you offer a discount, apply it to the subtotal — never to individual items after tax. Then compute tax on the discounted amount (not the original subtotal). Finally, subtract any deposit to arrive at the balance due. This order — subtotal, discount, tax, deposit — is the standard accounting sequence used by invoicing software worldwide.

Late payment interest: how it works and when to charge it

Late payment interest compensates you for the time value of money when a client pays after the due date. The calculation is straightforward: multiply the outstanding balance by the daily interest rate (annual rate divided by 365) and the number of days overdue. For example, a $5,000 balance at 12% annual interest that is 45 days late accrues $5,000 × 0.0329% × 45 = $74.05 in interest. Always state your late payment terms on the invoice itself — courts generally enforce interest charges only when the debtor was informed of the rate in advance.

Frequently Asked Questions

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