What are timely filing discounts?

Modified on Wed, 9 Oct at 12:53 AM

Many states in the USA offer a timely discount or early payment discount to incentivize businesses to file and pay their sales taxes on time. This discount can help you reduce the amount of sales tax owed if certain conditions are met.

The timely filing discount is a percentage discount applied to the sales tax liability when a business files its sales tax return and pays the tax due by the designated due date.

State-Specific Examples

Each state has its own rules and discount rates for timely sales tax payments. As always, check with the state for the most updated policy. Here are some examples from states:

State	Timely Discount	Requirements
Florida	2.5% discount for the first $1,200 of sales tax due, with a maximum discount of $30 per turn	Sales tax return must be filed and the tax must be paid by the due date
New York	5% discount of the amount due, with a maximum of $200 per quarter	Sales tax return must be filed and the payment must be made on or before the due date to qualify
Illinois	1.75% of tax due	Sales tax return must be filed and paid on or before the due date
Texas	0.5% discount for timely filing plus 1.25% for timely payment, possible 1.75% discount	Sales tax return must be filed and paid on or before the due date

Discount Calculation

In many states, the discount is automatically calculated and applied when you file your return electronically.

Example:

Tax Due: $1,000
Discount rate: 2.5% of the first $1,200
Discount amount: $1,000 x 0.025 = $25
Amount to pay: $1,000 - $25 = $975

Timely filing discounts can provide significant savings for businesses that stay on top of their sales tax obligations. It’s important to familiarize yourself with the specific rules and rates in your state to maximize the benefits. If you’d like to understand more on how timely discounts may apply to your sales tax filings, you can reach out to our Taxually professionals.