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 doesn’t prevail. We can easily calculate income tax in **Excel **by applying simple formulas and built-in functions. In this article, we’ll show you the step-by-step procedures to **Calculate Income Tax **in **Excel Using ****the IF Function**.

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## Step by Step Procedures to Calculate Income Tax in Excel Using IF Function

A fixed tax amount imposed on a person’s income by the central government is called **Income Tax**. It’s usually deducted from a person’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, we’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, we’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, it’ll return the accurate
**Tax value.**

### Final Output

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

🔎 **How Does the Formula Work?**

The **IF **function tests a logical operation. If it’s **True**, the formula returns a value. Otherwise, returns another value.

- Here, if
**C13**is equal to or less than**C6**, it’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**

**Similar Readings**

**How to Calculate Social Security Tax in Excel****Formula for Calculating Withholding Tax in Excel (4 Effective Variants)**

## 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, we’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, we’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, you’ll get the income tax of other salary amounts.

🔎 **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: Income Tax Computation in Excel Format (4 Suitable Solutions)**

### 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, you’ll see the desired tax amounts.

🔎 **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**

We’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: Computation of Income Tax Format in Excel for Companies**

## 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. Follow **the ExcelDemy** website for more articles like this. Don’t forget to drop comments, suggestions, or queries if you have any in the comment section below.