Overview
Your monthly Transaction Overview shows sales tax in two sub-lines: Tax on Net Sales and Tax on
Promotional Discounts. This article explains what each line means, why the split exists, and how the two lines together always equal the correct amount to remit to your state.
Why There Are Two Tax Lines
Sales tax is calculated on the full menu price of each item at the moment of sale — before any patron rewards or loyalty credits are applied. This is legally required in virtually all U.S. states.
When a patron redeems a reward, they pay less out of pocket, but the taxable amount does not change. The tax on the portion covered by the reward is a real cost — it belongs to the
promotion, not to the sale itself.
Splitting tax into two lines makes this visible and codeable:
A Simple Example
How the Report Is Structured
The report groups both tax lines by product category. Each category shows its net sales, the applicable tax rate, and then the two tax sub-lines side by side. A totals row at the bottom gives you the filing numbers directly.
In states with multiple tax rates (such as Virginia, which taxes prepared food at a higher rate than unprepared grocery items), each rate tier appears as its own row. The two tax sub-lines
follow the same tier structure.
What This Means for Filing
Nothing changes about how you file. You still remit Total Tax Collected to your state. The split is for your internal books — so your accountant can code the Tax on Promotional Discounts to your promotions expense account rather than leaving it as an unexplained variance in the tax account.
If your accountant has questions about GL coding or journal entries, refer them to the joe Accounting Guide for this report.
State Tax Structures
Joe's report handles the full range of state tax structures:
•Single flat rate — one rate applied to all taxable categories
•State + local stacking — combined rate applied per location automatically
•Multi-tier by product type — separate rate rows per category, with both tax sub-lines following the tier