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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