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# How to Do a Basic Tax Rate Calculation with VLOOKUP

A VLOOKUP formula can be used to calculate a tax rate relative to income. After following a few simple steps, you will be able to quickly calculate Tax based on income levels. Figure 1 – Final Solution

## Setting up the Data

• First, we setup our data so that the taxable income is in Column A and the Tax Rate in column B
• Enter the Income in cell E2 and leave cells E3 and E4 blank for now
• In this example, the Income used for the lookup is \$100,000 Figure 2 – Setting up the Data

## Calculate Tax Rate Using VLOOKUP

The VLOOKUP function finds the adjacent value based on the specified lookup value

• The basic formula is `=vlookup(lookup value, table array, column to return, Approximate Match [True/False])`
• In cell E3 type this formula `=VLOOKUP(E2,A3:B8,2,TRUE)`

We can see in this example that the formula returned a Tax Rate of 22% because \$100,000 falls between \$82,000 and \$158,000. If we were to put “False” in the Approximate Match piece of the formula, it would not have calculated properly since \$100,000 doesn’t match any of the values in Column A exactly Figure 3 – Applying the VLOOKUP formula on Tax Table

*Now, all we have to do is apply the Tax Rate to the Income in order to calculate the Tax.

## Calculate Tax Based on Rate

• The calculation for Tax is Income x Rate = Tax
• In cell E4 type this formula `=E2*E3` Figure 4 – Calculating the Tax

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