We can perform numerous mathematical tasks in MS Excel. Again, a lot of individuals like to store **Income **and **Expenses **details in Excel worksheets. Every once in a while, you may need to calculate the **Income Tax**. In some countries, company accountants take away the income tax from the salary. But, you have to find that out by yourself where the above system doesnâ€™t prevail. We can easily calculate income tax in Excel by applying simple formulas and built-in functions. In this article, weâ€™ll show you the step-by-step procedures to **Calculate Income Tax **in Excel Using **the IF Function**.

**Table of Contents**Expand

## How to Calculate Income Tax in Excel Using IF Function: With Easy Steps

A fixed tax amount imposed on a personâ€™s income by the central government is called **Income Tax**. Itâ€™s usually deducted from a personâ€™s salary during the financial year. However, you may also need to determine and deposit your own tax. Therefore, go through the below steps carefully to use **the IF function** for calculating **Income Tax **in Excel.

### STEP 1: Set up Income Tax Slab

We need to prepare the **Income **tax slab first. There are various **Tax Rates** that exist depending on the country and region. To illustrate, weâ€™ll use the following tax rate sample.

- For instance, a flat
**7%**of the total earning will be applicable for incomes**0**to**$10,000**. - Then,
**$750 + 12%**of the incomes greater than**$10,000**is set for**$10,001**to**$15,000**. - After that,
**$1000 + 18%**of the earnings larger than**$15,000**is fixed for**$15,001**to**$20,000**. - Subsequently,
**$1,350 + 27%**of the incomes larger than**$20,000**is applicable for**$20,001**to**$30,000**. - Furthermore,
**$1,700 + 32%**of the earnings higher than**$30,000**is set for**$30,001**to**above**.

### STEP 2: Input Income Data

In this step, weâ€™ll input the **Name **and their **Salary**.

- Firstly, create the required
**Headers**. - Next, type the
**Names**. - Afterward, input the precise
**Salary amounts.**

### STEP 3: Use Excel IF Function

- Now, select cell
**D13**. - Then, type the following formula:

`=IF(C13<=$C$6,C13*$D$6,IF(C13<=$C$7,(C13-$C$6)*$D$7+750,IF(C13<=$C$8,(C13-$C$7)*$D$8+1000,IF(C13<=$C$9,(C13-$C$8)*$D$9+1350,(C13-$C$9)*$D$10+1700))))`

- Consequently, press
**Enter**. - Thus, itâ€™ll return the accurate
**Tax value.**

### Final Output

- At last, use the
**AutoFill**tool to return the other income taxes. - As a result, youâ€™ll get the desired tax amounts.

ðŸ”Ž **How Does the Formula Work?**

The **IF **function tests a logical operation. If itâ€™s **True**, the formula returns a value. Otherwise, returns another value.

- Here, if
**C13**is equal to or less than**C6**, itâ€™ll give**C13*$D$6 output.** - If
**C13**is greater than**C6**but equal to or less than**C7**, it returns**(C13-$C$6)*$D$7+750 output.** - However, when
**C13**is greater than**C7**but equal to or less than**C8**, it returns the output of**(C13-$C$7)*$D$8+1000**. - Again, when
**C13**is greater than**C8**but equal to or less than**C9**, it returns**(C13-$C$8)*$D$9+1350 outcome.** - Lastly, If
**C13**is greater than**C9**, it returns**(C13-$C$9)*$D$10+1700) output.**

**Read More:** How to Calculate Income Tax on Salary with Old Regime in Excel

## Some Other Suitable Ways to Calculate Income Tax in Excel

Moreover, we have other methods to calculate income tax in Excel besides the **IF **function. Here, weâ€™ll show you **2 **other functions that you can use for determining the income tax. Here we are going to use the same dataset above.

### 1. Apply Excel VLOOKUP Function to Calculate Income Tax

In this method, weâ€™ll apply **the VLOOKUP function**. This function looks for a value in a range and returns a value from the specified column. The tax rate here is not like the earlier sample. So, follow the steps below to perform the task.

**STEPS:**

- First of all, select cell
**D13**. - There, type the formula:

`=VLOOKUP(C13,$B$6:$D$10,3,TRUE)+(C13-VLOOKUP(C13,$B$6:$D$10,1,TRUE))*VLOOKUP(C13,$B$6:$D$10,3,TRUE)`

- Press
**Enter**to return the result.

- Finally, use
**AutoFill**to complete the rest. - Thus, youâ€™ll get the income tax of other salary amounts.

ðŸ”Ž **How Does the Formula Work?**

**VLOOKUP(C13,$B$6:$D$10,3,TRUE)**

Firstly, this part of the formula looks for **C13** in the range **$B$6:$D$10**. Then, returns the rate from **column 3**.

**(C13-VLOOKUP(C13,$B$6:$D$10,1,TRUE))**

The **VLOOKUP **function looks for **C13 **in the range **$B$6:$D$10**. Returns the value from the **1st column**. Next, deducts the output from **C13**.

**VLOOKUP(C13,$B$6:$D$10,3,TRUE)+(C13-VLOOKUP(C13,$B$6:$D$10,1,TRUE))*VLOOKUP(C13,$B$6:$D$10,3,TRUE)**

At last, it multiplies the outputs of **VLOOKUP(C13,$B$6:$D$10,3,TRUE) **and **(C13-VLOOKUP(C13,$B$6:$D$10,1,TRUE))**. After that, add **VLOOKUP(C13,$B$6:$D$10,3,TRUE) **output to it.

**Read More: **How to Calculate Social Security Tax in Excel

### 2. Income Tax Calculation with SUMPRODUCT Function in Excel

We can also insert **the SUMPRODUCT function** to carry out the operation. Hence, learn the process below for **Income Tax Calculation**.

**STEPS:**

- Select cell
**D14**at last. - Then, type the formula:

`=SUMPRODUCT($D$7:$D$11-$D$6:$D$10,C14-$B$7:$B$11,N(C14>$B$7:$B$11))`

- Subsequently, press
**Enter**.

- Use
**AutoFill**to fill the rest of the series. - Thus, youâ€™ll see the desired tax amounts.

ðŸ”Ž **How Does the Formula Work?**

**N(C14>$B$7:$B$11)**

Firstly, this formula returns **0**. **The N function** changes texts to number values, dates to serial numbers, and **True **to **1**. Other than that, it returns **0**.

**$D$7:$D$11-$D$6:$D$10**

In this part, the formula finds out the differential rates.

**C14-$B$7:$B$11**

Weâ€™ll get the amount to each differential rate here.

**SUMPRODUCT($D$7:$D$11-$D$6:$D$10,C14-$B$7:$B$11,N(C14>$B$7:$B$11))**

Eventually, the formula will add all the product outputs.

**Read More: **Formula for Calculating Withholding Tax in Excel

**Download Practice Workbook**

Download the following workbook to practice by yourself.

## Conclusion

Henceforth, you will be able to **Calculate Income Tax **in Excel using the **IF Function **following the above-described procedures. Keep using them and let us know if you have more ways to do the task. Donâ€™t forget to drop comments, suggestions, or queries if you have any in the comment section below.

## Related Articles

- Reverse Tax Calculation Formula in Excel
- How to Calculate Marginal Tax Rate in Excel
- How to Calculate Federal Tax Rate in Excel
- How to Calculate Sales Tax in Excel

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