diff --git a/tests/commerce_discount.test b/tests/commerce_discount.test
index 5159429..2f87169 100644
--- a/tests/commerce_discount.test
+++ b/tests/commerce_discount.test
@@ -449,4 +449,38 @@ class CommerceDiscountTest extends CommerceDiscountTestBase {
     $this->assertTrue($order_wrapper->commerce_order_total->amount->value() == 1000, "Fixed order discount is removed when it's not applicable.");
   }
 
+  /**
+   * Test product discounts and taxes.
+   *
+   * @link https://www.drupal.org/node/1962484
+   */
+  public function testProductDiscountsAndTaxes() {
+    module_enable(array('commerce_tax', 'commerce_tax_ui'));
+
+    $tax_rate = commerce_tax_ui_tax_rate_new('vat');
+    $tax_rate['name'] = 'vat_test';
+    $tax_rate['title'] = 'VAT Test';
+    $tax_rate['rate'] = 0.2;
+    commerce_tax_ui_tax_rate_save($tax_rate);
+    commerce_tax_rates_reset();
+
+    $this->createDiscount('product_discount', 'percentage', 30, 'discount_30_off');
+    $product = $this->createDummyProduct('TEST-PRODUCT', 'Test Product', 1025);
+    $order = $this->createDummyOrder($this->store_customer->uid, array($product->product_id => 1), 'completed');
+    $order_wrapper = commerce_cart_order_refresh($order);
+
+
+    $line_item_total = $order_wrapper->commerce_line_items->get(0)->commerce_total->value();
+
+    // Discounts should execute before taxes and be first component.
+    $assert_discount_amount = (commerce_round(COMMERCE_ROUND_HALF_UP, 1025 * 0.30)) * -1;
+    $this->assertEqual($line_item_total['data']['components'][1]['price']['amount'], $assert_discount_amount);
+    // Tax should run after discount and be the second component.
+    $assert_vat_amount = commerce_round(COMMERCE_ROUND_HALF_UP, (1025 + $assert_discount_amount) * 0.2);
+    $this->assertEqual($line_item_total['data']['components'][2]['price']['amount'], $assert_vat_amount);
+    // Assert the final amount.
+    $assert_final_amount = 1025 + $assert_discount_amount + $assert_vat_amount;
+    $this->assertEqual($line_item_total['amount'], $assert_final_amount);
+
+  }
 }