If you want to calculate your income tax on salary Excel can be beneficial for you. In this article, I will be showing you different methods on how to calculate income **tax on salary** with example in Excel

Here, I have used a sample dataset that contains **Employee Name,** **Gross salary,** and **Taxable Income**. For different methods and for different examples there are slight variations in the columns of the dataset. But, all of them contain salary details of different employees.

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## Example 1: Using Generic Formula to Calculate Income Tax on Salary in Excel

Using the generic formula to calculate income tax in Excel is the simplest way of calculating income tax. In this method, we used an example in which a fixed tax rate is applicable to all the employees.

Let me show you how to calculate income** tax on salary** with an example in Excel.

**Steps:**

In this example, at first, you have to calculate taxable income from gross salary and total deduction.

- To begin with, select the cell in which you want to calculate your taxable income. here, I selected cell
**E5**. - Next, in cell
**E5**write the following formula,

`=C5-D5`

Here, I **subtracted **the **Total Deductions** from the **Gross Salary**. This will give you the **Taxable Income** for that particular cell

- Now, press
**ENTER**to get the**Taxable Income**.

Here, I got a **Taxable Income** for an employee named Jack.

- After that, drag the
**Fill Handle**to get**Taxable Income**for every employee.

Now, you will get the **Taxable Income **for every employee. From which you will calculate the **Tax on Salary**.

- Next, select the cell in which you want to calculate the
**Tax on Salary**. Here, I selected cell**F5**. - After that, in the cell
**F5**write the following formula,

`=E5*$C$11`

Here, **E5** is the **Taxable Income** for that particular employee and** C11** is the fixed **Tax Rate**. In this formula, I multiplied **Taxable Income** by **Tax Rate will** to get tax** on Salary** for the particular employee that the cell represents.

- Now, press
**ENTER**to get the**Tax on Salary**.

- Finally, drag the
**Fill Handle**to get**Tax on Salary**for every employee.

Now, you will get **Tax on Salary** of every employee.

**Read More: **Reverse Tax Calculation Formula in Excel

## Example 2: Calculating Income Tax on Salary with Different Tax Slabs and Tax Surcharge

In this method, we used an example where there are different tax slabs for different income ranges. And a surcharge is applied on tax for some income ranges.

With this example, Let me show you how to calculate income tax on salary with different tax slabs and tax surcharges in Excel step by step.

**Steps:**

- To begin with select the cell for which you want to calculate the
**Income Tax**. Here, I selected**D5**, which is the**Income Tax**for an employee named Jack.

- Next, in cell
**D5**write the following formula.

`=C5*C13`

Here, **C5** is the **Taxable Income **for the particular employee named Jack and **C13 **is the tax rate from **Income Tax Slab** for that particular income range. This formula will **multiply** both values then it will return you the **Income Tax **for that employee.

- Now, press
**ENTER**to get**Income Tax**.

Now, for cell **D6**, you can calculate the **Income Tax **by following the exact same steps.

- Firstly, select cell
**D6**.

- Secondly, in cell
**D6**write the following formula.

`=C6*C12`

Here, **C6** is the **Taxable Income **for the particular employee named Jack and **C12 **is the tax rate from **Income Tax Slab** for that particular income range. This formula will **multiply** both values then it will return you the **Income Tax **for that employee.

- Now, press
**ENTER**to get**Income Tax**.

Finally, you will be able to calculate** Income Tax** for every employee by following these exact steps.

Now, From the dataset, you can see that a certain surcharge is applied on tax for some income ranges. Here, we can see that no surcharge is applied for **Jack**, **Jerry**, and **Amy**. Because their **Taxable Income** does not fall in those particular ranges.

For Penny, we can see that a **5%** surcharge is applied on tax. And we have to calculate the **Surcharge** from this information.

- Firstly, select the cell you want to see the calculated surcharge in. I selected cell
**E7**. - In cell
**E7**, write the following formula,

`=D7*C19`

Here,** D7** is the **Income Tax** for that particular employee and **C19** is the surcharge **Rate**. This formula will **multiply** **Income Tax **and **Rate **and return you the** Surcharge **on tax for that particular employee.

- Now, press
**ENTER**to get the**Surcharge**.

For Steve, we can see that a **10%** surcharge is applied on tax. Now, you can calculate the surcharge on tax by following those previous steps that we followed for Penny.

- Firstly, select cell
**E8**. - In cell
**E8**, write the following formula,

`=D8*C20`

Here,** D8 **is the **Income Tax** for that particular employee and **C20** is the surcharge **Rate**. This formula will **multiply** **Income Tax **and **Rate **and return you the** Surcharge **on tax for that particular employee.

- Now, press
**ENTER**and you will get the**Surcharge**.

Now, we have got income tax and surcharge for all the employees. Using these two columns we can calculate the total tax for every employee.

- Firstly, select the cell in which you want to calculate the
**total tax**. Here, I selected cell**F5**. - Secondly, in cell
**F5**write the following formula,

`=D5+E5`

Here, **D5 **is **Income Tax** and **E5** is **Surcharge**. And this formula will return you the **sum** of **Income Tax** and **Surcharge **which is the **Total Tax**.

- Now, press
**ENTER**to get the**Total Tax**.

- Finally, drag the
**Fill Handle**to get the**Total Tax**for every employee.

Now, you will get the **Total Tax** of every employee.

**Read More: **How to Calculate Sales Tax in Excel

## Example 3: Inserting Excel SUMPRODUCT Function to Calculate Income Tax on Salary

By using **the SUMPRODUCT function** you can calculate tax on salary with some easy steps.

Let me show you how to calculate income **tax on salary** in Excel with the use of the **SUMPRODUCT **function.

**Steps:**

- To begin with, select the first row of the
**Income Tax Slab**table.

- After that,
**right-click**on the row and select**Insert**to insert a new row.

- Next, select the cell in which you want to calculate the
**Income Tax**. Here, I selected cell**D5**. - In the cell
**D5**write the following formula,

`=SUMPRODUCT($D$14:$D$18-$D$13:$D$17,C5-$C$14:$C$18,N(C5>$C$14:$C$18))`

Here, in the** SUMPRODUCT** function, I selected **D14:D18-D13:D17 **as **array1** which figures out the differential rate. For **array2 **I selected **C5-C14:C18 **where **C5 **is the **Taxable Income** for that specific employee and **C5-C14:C18 **returns the amount of each differential rate. And for **array3 **I used **the N function** which will return the value accordingly for **C5>C14:C18**.

Now, the **SUMPRODUCT **function will return us the **Sum** of **multiplied** components of these **3 arrays**.

In every case, I used **absolute cell reference **so that the selected cell range remain fixed while using the **AutoFill**.

- Press
**ENTER**key and you will get the**Income Tax**for that specific employee.

- Now, drag the
**Fill Handle**to get**Income Tax**values for every employee.

Finally, you will get** Income Tax **value for every employee.

## Example 4: Using VLOOKUP Function to Determine Income Tax on Salary

You can calculate income tax by using **the VLOOKUP function**. For this method, we took an example that has one extra column in the income tax slab which is **Cumulative**. This column represents the cumulative tax for that particular tax rate.

Let me show you how to calculate income tax on salary in Excel with the use of the **VLOOKUP **function step by step.

**Steps: **

- First, select the cell in which you want to get the income tax value. Here, I selected cell
**D5**. - Secondly, in cell
**D5**, type the following function,

`=VLOOKUP(C5,$B$13:$E$17,4,TRUE)+(C5-VLOOKUP(C5,$B$13:$E$17,1,TRUE))*VLOOKUP(C5,$B$13:$E$17,3,TRUE)`

**Formula Breakdown**

- Here, for the first
**VLOOKUP**function, I selected**C5**as**lookup_value**,**B13:E17**as**table_array**,**4**as**col_index_number**and for**range_lookup**I selected**TRUE**. This will return the cumulative tax for**C5**. - To get the income tax for
**C5**I have taken two more**VLOOKUP**functions. For the second**VLOOKUP**function, I selected**C5**as**lookup_value**,**B13:E17**as**table_array**,**1**as**col_index_number**and for**range_lookup**I selected**TRUE**. - And for the third
**VLOOKUP**function, I selected**C5**as**lookup_value**,**B13:E17**as**table_array**,**3**as**col_index_number**and for**range_lookup**I selected**TRUE**. - Now, The second part of the formula will return the additional tax amount for
**C5**. By adding these two parts our formula will return the**Income Tax**value for**C5**. - While selecting the cell range, every time, I used
**absolute cell reference**so that the selected cell range remain fixed while using the**AutoFill**.

- Next, press
**ENTER**and you will get the**Income Tax**value.

- After that, drag the
**Fill Handle**to get the Income**Tax for every**employee.

Finally, you will get** Income Tax **on the salary of every employee.

## Example 5: Using Nested IF Function to Calculate Income Tax in Excel

To explain this method I have taken an example that considers** Investment**. If someone has invested **30%** or more than **30%** of their salary then the investment amount is deducted from the **Salary** to calculate **Taxable Income**.

Let me show you step by step how to calculate income tax on salary in Excel with the use of** IF **and nested** IF** function.

**Steps: **

In the beginning, we have to calculate the **Taxable Income **with the help of the **Investment** rate and **Salary**.

- Firstly, select the cell in which you want to calculate the taxable income. Here, I have selected cell
**E5**. - Secondly, in cell
**E5**write the following formula,

`=IF(D5>=30%,C5-(C5*D5),C5)`

Here, I wrote **D5>=30% **as **logical_test**,** C5-(C5*D5) **as** value_if_true**, and **C5 **as **value_if_false. ** **D5 **is the investment rate, and **C5 **is the salary. If the **logical test** is **TRUE** the formula will **deduct** the **Investment **amount from the salary and return it as** Taxable Income** and if the **logical test** is **FALSE** then it will return the salary as **Taxable Income**.

- Press
**ENTER**and you will get the**Taxable Income**.

- Now, drag the
**Fill Handle**to get**Taxable Income**for every employee.

Finally, you will get the **Taxable Income **for every employee.

Now, we will have to calculate income tax from this taxable income.

- Firstly select the cell in which you want to calculate the income
**Tax.**Here, I selected**F5 .** - After that, in cell
**F5**write the following formula,

`=IF(E5<=$C$12,"nil",IF(E5<=$C$13,(E5-$C$12)*$D$13,IF(E5<=$C$14,(E5-$C$13)*$D$14+($C$13-$C$12)*$D$13,(E5-$C$14)*$D$15+($C$14-$C$13)*$D$14+($C$13-$C$12)*$D$13)))`

**Formula Breakdown **

- In this formula, for each
**logicat_test**, I have given a value for**value_if_true**but for**value_if_false**I use another**IF**function. - If
**E5<=C12**then the formula will return the value**“nil”**and if not then it will go into another logical test. It will check if**E5<=C13**. If it’s**TRUE**then it will return the value for**(E5-C12)*D13**and if the test result is**FALSE**then it will go into another**IF**function. It will check for**E5<=C14**. If the**logical_test**is**TRUE**then it will return the value for**(E5-C13)*D14+(C13-C12)*D13**and if the**logical_test**is**FALSE**then it will return the value of**(E5-C14)*D15+(C14-C13)*D14+(C13-C12)*D13**. - Every time, I used
**absolute cell reference**so that the selected cell range remain fixed while using the**AutoFill**.

- Now, press
**ENTER**and you will get a**Tax**for this particular employee.

- After that, by dragging the
**Fill Handle**you will get**Tax**for every employee.

Finally, you have calculated **Tax** for all the employees.

## Example 6: Using Nested IF & AND Functions to Calculate Income Tax on Salary with Payment Type

For this method, I have chosen an example that considers payment type and status. If someone’s payment type is remittance and the status is filer then he/she will have to pay **5%** tax on salary. And if someone’s payment type is remittance and the status is non-filer then he/she will have to pay **7%** tax on salary. For all the other cases **3%** tax on salary is applied.

Let me show you how to calculate Calculate Income Tax on Salary with Payment Type in Excel by using Nested **IF** and **AND** functions.

**Steps:**

- Firstly, select the cell in which you want to calculate the tax. Here, I selected
**F5**. - In cell F5 write the following formula,

`=IF(AND(D5="Remittence",E5="Filer"),C5*5%,IF(AND(D5="Remittence",E5="Non-Filer"),C5*7%,C5*3%))`

**Formula Breakdown**

- In this formula in the first
**IF**function I used an**AND**function for the**logicat_test**,**C5*5%**as**value_if_true**, and another**IF**function as**value_if_false.** - In this second
**IF**function I used another**AND**function as**logical_test**,**C5*7%**as**value_if_true**, and**C5*3%**as**value_if_false.** - Here,
**C5**is the**Income**. If the first**AND**is satisfied then the formula will return a**5%****Tax**on**Income**. - If the second
**AND**function is satisfied then the formula will return a**7% Tax**on**Income**and for all the other cases the formula will return a**3% Tax**on**Income**. - In every case, I used
**absolute cell reference**so that the selected cell range remain fixed while using the**AutoFill**.

- Now, press
**ENTER**to get the**Tax**amount.

- After that, drag
**Fill Handle**to automatically copy the formula to all the cells of the column.

Finally, you will get the **Tax **for all the employees.

## Things to Remember

- It should be noted that while calculating income tax different tax slabs are applied for different regions.

## Practice Section

Here, I have provided a practice sheet for you to practice How to Calculate **Income Tax on Salary** in Excel.

**Download Practice Workbook**

## Conclusion

In this article, I covered different methods on How to Calculate **Income Tax on Salary **With **Example** in Excel. I used different examples from different situations for you to understand clearly. I hope this will be beneficial for you. In addition, I recommend you to practice more and more to get a better grip on excel. Last but not the least, if you have any questions or any suggestions feel free to let me know in the comment section below.