From 4dbf46f2cb64240092843ebfdef766ec5b2a7116 Mon Sep 17 00:00:00 2001
From: Nicolas Gorga <62995075+NicolasGorga@users.noreply.github.com>
Date: Tue, 9 Dec 2025 15:28:22 -0300
Subject: [PATCH] fix(utils): avoid inflating refundable_total for tax
 inclusive pricing (#14237)

* Prevent refundable_total inflation for tax inclusive item pricing

* Add tests

* Add changeset

* Update changeset

* Review changes
---
 .changeset/better-memes-move.md               |  5 +++
 .../core/utils/src/totals/__tests__/totals.ts | 37 +++++++++++++++++++
 .../core/utils/src/totals/line-item/index.ts  |  1 +
 packages/core/utils/src/totals/tax/index.ts   |  5 +++
 4 files changed, 48 insertions(+)
 create mode 100644 .changeset/better-memes-move.md

diff --git a/.changeset/better-memes-move.md b/.changeset/better-memes-move.md
new file mode 100644
index 0000000000..f7a8f389c6
--- /dev/null
+++ b/.changeset/better-memes-move.md
@@ -0,0 +1,5 @@
+---
+"@medusajs/utils": patch
+---
+
+fix(utils): avoid inflating refundable_total for tax inclusive pricing
diff --git a/packages/core/utils/src/totals/__tests__/totals.ts b/packages/core/utils/src/totals/__tests__/totals.ts
index f9dc364efd..16bf0d1f4e 100644
--- a/packages/core/utils/src/totals/__tests__/totals.ts
+++ b/packages/core/utils/src/totals/__tests__/totals.ts
@@ -1267,4 +1267,41 @@ describe("Total calculation", function () {
       total: 0,
     })
   })
+
+  it("should calculate refundable_total for tax inclusive items without inflating tax", function () {
+    const cartTaxInclusive = {
+      items: [
+        {
+          unit_price: 100,
+          quantity: 2,
+          is_tax_inclusive: true,
+          detail: {
+            fulfilled_quantity: 2,
+            shipped_quantity: 2,
+            return_requested_quantity: 0,
+            return_received_quantity: 0,
+            return_dismissed_quantity: 0,
+            written_off_quantity: 0,
+          },
+          tax_lines: [
+            {
+              rate: 20,
+            },
+          ],
+          adjustments: [
+            {
+              amount: 10,
+            },
+          ],
+        },
+      ],
+    }
+
+    const serializedTaxInclusive = JSON.parse(
+      JSON.stringify(decorateCartTotals(cartTaxInclusive))
+    )
+
+    expect(serializedTaxInclusive.items[0].refundable_total).toBe(188)
+    expect(serializedTaxInclusive.items[0].refundable_total_per_unit).toBe(94)
+  })
 })
diff --git a/packages/core/utils/src/totals/line-item/index.ts b/packages/core/utils/src/totals/line-item/index.ts
index 67aa77537e..083ed65077 100644
--- a/packages/core/utils/src/totals/line-item/index.ts
+++ b/packages/core/utils/src/totals/line-item/index.ts
@@ -94,6 +94,7 @@ function setRefundableTotal(
   )
 
   const taxTotal = calculateTaxTotal({
+    isTaxInclusive: item.is_tax_inclusive,
     taxLines: item.tax_lines || [],
     taxableAmount: refundableSubTotal,
   })
diff --git a/packages/core/utils/src/totals/tax/index.ts b/packages/core/utils/src/totals/tax/index.ts
index a9ceb2c656..7376118817 100644
--- a/packages/core/utils/src/totals/tax/index.ts
+++ b/packages/core/utils/src/totals/tax/index.ts
@@ -3,15 +3,20 @@ import { BigNumber } from "../big-number"
 import { MathBN } from "../math"
 
 export function calculateTaxTotal({
+  isTaxInclusive = false,
   taxLines,
   taxableAmount,
   setTotalField,
 }: {
+  isTaxInclusive?: boolean
   taxLines: Pick<TaxLineDTO, "rate">[]
   taxableAmount: BigNumberInput
   setTotalField?: string
 }) {
   let taxTotal = MathBN.convert(0)
+  if (isTaxInclusive) {
+    return taxTotal
+  }
 
   for (const taxLine of taxLines) {
     const rate = MathBN.div(taxLine.rate, 100)