How a discount is calculated

The amount saved is the percentage applied to the original price; the sale price is what's left:

saving = price × (percent ÷ 100)

sale price = price − saving

Worked example

A $80 item at 25% off: saving = 80 × 0.25 = $20, so the sale price is $60.

How do I stack two discounts?

Apply them one after another, not by adding the percentages. 20% then a further 10% off $100 gives $100 × 0.8 × 0.9 = $72, not $70.

Does this include sales tax?

No — it works on the pre-tax price. Add any tax to the sale price afterwards.