You can see a sample data set given below that will help us compute income tax in Excel format.

### Method 1 – Computing Income Tax for Flat Rates in Excel Format

**Steps:**

- Add more cells to calculate taxable income from gross income.

- Subtract total deductions and total exemptions from gross income in cell
**E5**. Use the following formula:

`=B5-C5-D5`

- Press
**Enter**to see the taxable income in cell**E5**.

- Suppose that, for income below
**$10,500**, the tax rate is a flat**10%**. Calculate the tax in cell**E6**using the following formula.

`=E5*10/100`

- Press
**Enter**to apply.

**Read More:** Computation of Income Tax Format in Excel for Companies

### Method 2 – Using Tax Brackets for Computation of Income Tax in Excel Format

Tax brackets are typically determined progressively by the federal government for different income ranges. So, you’ll need to create a table detailing the tax brackets and their rates.

**Steps:**

- Calculate taxable income from gross income like the previous method and create helper cells to do so.

- Subtract the total deductions and total exemptions from gross income in cell
**B8**:

`=B5-C5-D5`

- Hit
**Enter**.

- Divide the taxable income according to the tax bracket.
- Since the taxable income is between
**$89,075**and**$170,050**(4th tax bracket) in the taxable income bracket, the tax will be calculated for four brackets:**10%**,**12%**,**22%**, and then**24%**on income. - Calculate the tax for the first
**$10,275**with a tax rate of**10%**from the taxable income in cell**F11**using the following formula.

`=10275*10/100`

- Subtract
**$10,275**from**$41,775**and then calculate the tax with the associated tax rate in cell**F12**with the formula written below.

`=31500*20/100`

- Subtract
**$41,775**from**$89,075**and calculate the tax with the associated tax rate in cell**F13**just like the previous step by using the formula below.

`=47300*22/100`

- For the last tax bracket, we will subtract
**$89,075**from**$115,000**since that’s the taxable income**.** - Calculate the tax with the associated tax rate in cell
**F14**using the following formula:

`=25925*24/100`

- Add all the tax values from the previous step and get the total tax by using the following equation in cell
**E8:**

`=F11+F12+F13+F14`

- Press
**Enter**.

### Method 3 – Applying IF Function for Computation of Income Tax in Excel Format

- Consider the following data set for computing taxes by using the
**IF**function.

**Steps:**

- Use the following formula to compute the income tax for Nathan in cell
**D5:**

`=IF(C5<$C$12,"$0",IF(C5<=$C$13,(C5-8000)*$D$13,IF(C5<=$C$14,(C5-15000)*$D$14,IF(C5<=$C$15,(C5-22000)*$D$15,IF(C5<=$C$16,(C5-29000)*$D$16,IF(C5>$C$16,(C5-36000)*$D$17))))))`

- Pess
**Enter**to see the value of income tax in cell**D5**.

- Use the fill handleÂ to drag the formula to the other cells.

- Compute the highest tax in cell
by using the following formula.*E12*

`=(B13-B12)*D12`

- Press
**Enter**to see the result in cell**E12**.

- Use
**AutoFill**for the other cells.

- Compute the cumulative tax in cell
**F12**by applying the following formula.

`=(C13-C12)*E12`

- Press
**Enter.**

- Type the following formula in cell
**F13**to get the cumulative tax value:

`=E12+E13`

- Press
**Enter**to get the value.

- Use
**AutoFill**for the rest of the column.

- To compute the individual cumulative tax for Nathan, type the following formula in cell
.*E5*

`=F12+D5`

- Press
**Enter**.

- AutoFill the other cells by dragging the fill handle.

### Method 4 – Inserting VLOOKUP Function for Computation of Income Tax in Excel Format

- Consider the following data set to compute tax using the
**VLOOKUP**function.

**Steps:**

- Use the following formula of the
**VLOOKUP**function to compute the income tax for Nathan in cell**D5**.

`=VLOOKUP(C5,$B$12:$D$17,3,TRUE)+(C5-VLOOKUP(C5,$B$12:$D$17,1,TRUE))*VLOOKUP(C5,$B$12:$D$17,3,TRUE)`

- Then, press
to see the value of income tax in cell*Enter*.*D5*

- Drag the formula to the lower cells via the fill handle.

- Compute the highest tax in cell
**E12**using the following formula:

`=(B13-B12)*D12`

- Hit
**Enter**.

- Use the fill handle to AutoFill the rest of the cells in the colum.

- Compute the cumulative tax in cell
using the following formula.*F12*

`=(C13-C12)*E12`

- Press
**Enter**.

- Type the following formula in cell
**F13**to get the cumulative tax value:

`=E12+E13`

- Press
**Enter**to get the value.

- Use the fill handle to drag the formula to the other cells.

- To compute the individual cumulative tax for Nathan, type the following formula in cell
**E5:**

`=F12+D5`

- Press
**Enter.**

- AutoFill the column via the fill handle.

**Things to Remember**

- While computing income tax by using the
**VLOOKUP**function, you must lock the value of the table array using**F4**. Otherwise, you won’t get accurate results when you use**AutoFill**to drag the formula in the lower cells. - Similarly, while using the
**IF**function, you must lock the value of the logical test using**F4**.

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