### Method 1 – Using Arithmetic Formula to Calculate Withholding Tax

** Steps**:

- Input the tax rate first(i.e.
**50%**) as this method is only applicable for the fixed tax rate.

- The taxable income is deducted by subtracting the related factors. Input the following formula to do so.

`=C5-C6-C7`

Here,

**C5 **= Gross Income

**C6 **= Total Deductions

**C7 **= Total Exemptions

- Press
**ENTER**to have the taxable income.

- Input the formula mentioned below to calculate the withholding tax.

`=C9*C10`

Here,

**C9** = Taxable Income

**C10 **= Tax rate

- Press
**ENTER**to have the withholding tax value.

### Method 2 – Calculate Withholding Tax with Nested IF Function

** Steps**:

- Find the
**Taxable Income**for this, input the following formula to do so.

`=D5-D6-D7`

Here,

**D5 **= Gross Income

**D6 **= Total Deductions

**D7 **= Total Exemptions

- Press
**ENTER**.

- Apply the following formula to have the tax value.

`=IF($C$15<=$C$10, $D$10,`

` IF($C$15<=$C$11, ($C$15-$B$11)*$D$11,`

` IF($C$15<=$C$12, ($B$12-$B$11)*$D$11 + ($C$15-$B$12)*$D$12,`

` ($B$12-$B$11)*$D$11 + ($B$13-$B$12)*$D$12 + ($C$15-$B$13)*$D$13`

` )`

` )`

`)`

The **IF function **searches for the condition related to the taxable income value and returns the Tax amount. The **IF** functions traverse until the conditions are met. Each **IF** checks whether the value presents within the range

- Press
**ENTER**to have the tax amount.

### Method 3 – Formula with IFS Function to Calculate Withholding Tax

** Steps**:

- Calculate the
**Taxable Income**. Input the following formula to do so.

`=D5-D6-D7`

Here,

**D5 **= Gross Income

**D6 **= Total Deductions

**D7 **= Total Exemptions

- Press the
**ENTER**button.

- Input the following formula to calculate the withholding tax in the selected cell.

`=IFS(`

` $C$15<=$C$10, $D$10,`

` $C$15<=$C$11, ($C$15-$B$11)*$D$11,`

` $C$15<=$C$12, ($B$12-$B$11)*$D$11 + ($C$15-$B$12)*$D$12,`

` TRUE, ($B$12-$B$11)*$D$11 + ($B$13-$B$12)*$D$12 + ($C$15-$B$13)*$D$13`

`)`

- Hit
**ENTER**to have the result.

### Method 4 – Using SUMPRODUCT Function to Calculate Withholding Tax

** Steps**:

- Add 2 new columns to the dataset. We named them
**Differential**and**Amount**.

- Calculate the
**Taxable Income**. Input the following formula.

`=D5-D6-D7`

- Hit the
**ENTER**button.

- Find the difference in rate in the
**Differential**column.

*// Insert 0% in cell***E10**and use the following formula to do so in cell**E11**:

`=D5-D6-D7`

We subtracted the tax rates close to one another:

- Press
**ENTER**to have the difference in rates.

- Use
**Fill Handle**to**AutoFill**the rest cells.

- Input the income amount related to the range in the first cell of the
**Amount**column (i.e.**$43210.00**). - Calculate the tax amount in the first range where the tax is allowed.

*Use the following formula in cell***F11**:

`=$C$15-C10`

Here,

**C15 **= Taxable income**
C10 **= Highest amount in the first range

- Press
**ENTER**.

**AutoFill**the remaining cells.

- Use the following formula to have the tax amount.

`=SUMPRODUCT(E10:E13,IF(F10:F13<0,0,F10:F13))`

Two arrays ranging from **E10:E13** and **F10:F13** are multiplied first and then added to the multiplied result.

- Hit
**ENTER**to have the result.

**Download Practice Workbook**

## Related Articles

- How to Calculate Marginal Tax Rate in Excel
- How to Calculate Social Security Tax in Excel
- How to Calculate Federal Tax Rate in Excel
- How to Calculate Income Tax on Salary with Example in Excel
- How to Calculate Sales Tax in Excel

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Why are the results different for each method? shouldn’t they all come out with the same tax owed result. Seems like something is wrong here.

Hello

Michael A. DunnThanks for visiting our blog and noticing a critical fact. You were right. Sorry for the inconvenience. We have improved all the formulas and modified the article.

Using the arithmetic formula would be best if you worked with a fixed rate. So, it may provide different results from other procedures. However, all the procedures except for using the arithmetic formula will calculate almost the same result. So, if you do not have a fixed rate, consider applying the formulas Using

Nested IF,IFSandSUMPRODUCTfunctions.Regards

ExcelDemy