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
Instant Connection to an Expert through our Excelchat Service:
Most of the time, the problem you will need to solve will be more complex than a simple application of a formula or function. If you want to save hours of research and frustration, try our live Excelchat service! Our Excel Experts are available 24/7 to answer any Excel question you may have. We guarantee a connection within 30 seconds and a customized solution within 20 minutes.
Leave a Comment