When you create a discount item, the way you place it in the sales transaction affects how your sales tax is calculated.
For example: If the discount is to apply to more than one item, first use a subtotal item to calculate the total of the items. Then, enter the discount item beneath the subtotal. Also, sales tax amount is also based on whether the discount item is taxable or non-taxable.
In some situations a taxable discount might be divided between taxable and nontaxable items. In this case, a portion of the discount must appear in both taxable and nontaxable sales.