Definition
The subtotal is the sum of all line item totals on an invoice before taxes, discounts, and other adjustments are applied. It represents the base value of the goods or services. Taxes are usually calculated on the subtotal, or on the subtotal after discounts, and then added to produce the total due.
Subtotal in practice
Showing a subtotal separately from the total makes the invoice easy to audit. The client can check that the lines add up, see exactly how much tax was charged, and confirm any discount was applied correctly.
Frequently Asked Questions
Is tax calculated before or after the discount?
In most jurisdictions tax is calculated on the discounted amount, since that is the price actually paid. Apply the discount to the subtotal first, then calculate tax on the result.