Tax-Inclusive Promotions

In this guide, you’ll learn how taxes are applied to promotions in a cart.

What are Tax-Inclusive Promotions?#

By default, promotions are tax-exclusive, meaning that the discount amount is applied as-is to the cart before taxes are calculated and applied to the cart total.

A tax-inclusive promotion is a promotion for which taxes are calculated from the discount amount entered by the merchant.

When a promotion is tax-inclusive, the discount amount is reduced by the calculated tax amount based on the tax region's rate. The reduced discount amount is then applied to the cart total.

When to Use Tax-Inclusive Promotions#

Tax-inclusive promotions are most useful when using tax-inclusive prices for items in the cart.

In this scenario, Medusa applies taxes consistently across the cart, ensuring that the total price reflects the taxes and promotions correctly.

You can see this in action in the examples below.

What Makes a Promotion Tax-Inclusive?#

The Promotion data model has an is_tax_inclusive property that determines whether the promotion is tax-inclusive.

If is_tax_inclusive is disabled (which is the default), the promotion's discount amount will be applied as-is to the cart, before taxes are calculated. See an example in the Tax-Exclusive Promotion Example section.

If is_tax_inclusive is enabled, the promotion's discount amount will first be reduced by the calculated tax amount (based on the tax region's rate). The reduced discount amount is then applied to the cart total. See an example in the Tax-Inclusive Promotion Example section.

How to Set a Promotion as Tax-Inclusive#

You can set the is_tax_inclusive property when creating a promotion by using either the Promotion workflows or the Promotion Module's service.

For example, if you're creating a promotion with the createPromotionsWorkflow in an API route:

Code
1import type {2  MedusaRequest,3  MedusaResponse,4} from "@medusajs/framework/http"5import { createPromotionsWorkflow } from "@medusajs/medusa/core-flows"6
7export async function POST(8  req: MedusaRequest,9  res: MedusaResponse10) {11  const { result } = await createPromotionsWorkflow(req.scope)12    .run({13      input: {14        promotionsData: [{15          code: "10OFF",16          // ...17          is_tax_inclusive: true,18        }],19      }20    })21
22  res.send(result)23}

In the above example, you set the is_tax_inclusive property to true when creating the promotion, making it tax-inclusive.

Updating a Promotion's Tax-Inclusiveness#

A promotion's tax-inclusiveness cannot be updated after it has been created. If you need to change a promotion's tax-inclusiveness, you must delete the existing promotion and create a new one with the desired is_tax_inclusive value.

Tax-Inclusiveness Examples#

The following sections provide examples of how tax-inclusive promotions work in different scenarios, including both tax-exclusive and tax-inclusive promotions.

These examples will help you understand how tax-inclusive promotions affect the cart total, allowing you to decide when to use them effectively.

Tax-Exclusive Promotion Example#

Consider the following scenario:

• A tax-exclusive promotion gives a $10 discount on the cart's total.
• The cart's tax region has a 25% tax rate.
• The cart total before applying the promotion is $100.
• The prices in the cart's tax region are tax-exclusive.

The result:

1. Apply $10 discount to cart total: $100 - $10 = $90
2. Calculate tax on discounted total: $90 x 25% = $22.50
3. Final total: $90 + $22.50 = $112.50

Tax-Inclusive Promotion Example#

Consider the following scenario:

• A tax-inclusive promotion gives a $10 discount on the cart's total.
• The cart's tax region has a 25% tax rate.
• The cart total before applying the promotion is $100.
• The prices in the cart's tax region are tax-exclusive.

The result:

1. Calculate actual discount (removing tax): $10 ÷ 1.25 = $8
2. Apply discount to cart total: $100 - $8 = $92
3. Calculate tax on discounted total: $92 x 25% = $23
4. Final total: $92 + $23 = $115

Tax-Inclusive Promotions with Tax-Inclusive Prices#

Consider the following scenario:

• A tax-inclusive promotion gives a $10 discount on the cart's total.
• The cart's tax region has a 25% tax rate.
• The cart total before applying the promotion is $100.
• The prices in the cart's tax region are tax-inclusive.

The result:

1. Calculate actual discount (removing tax): $10 ÷ 1.25 = $8
2. Calculate cart total without tax: $100 ÷ 1.25 = $80
3. Apply discount to cart total without tax: $80 - $8 = $72
4. Add tax back to total: $72 x 1.25 = $90

The final total is $90, which correctly applies both the tax-inclusive promotion and tax-inclusive pricing.