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How to calculate income tax with slabs in Excel and Google Sheets
Topic:Finance basicsExcel & Google Sheets
=IF(A2<=12500,0,IF(A2<=50000,(A2-12500)*0.2,IF(A2<=125000,7500+(A2-50000)*0.4,37500+(A2-125000)*0.45)))✓
Verified example
Computed by a real spreadsheet engine on the sample data below.
| Taxable Income | Tax Due |
| 10000 | |
| 30000 | |
| 75000 | |
| 150000 |
=IF(A2<=12500,0,IF(A2<=50000,(A2-12500)*0.2,IF(A2<=125000,7500+(A2-50000)*0.4,37500+(A2-125000)*0.45)))→0
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Step by step
- 1Enter taxable income in column A.
- 2In B2, enter the nested IF that calculates tax at each band. Example (UK-style 2024): 0% up to £12,500; 20% up to £50,000; 40% up to £125,000; 45% above.
- 3For a more flexible approach, build a slab table (columns: Upper Limit, Rate, Cumulative Tax at bottom of band) and use SUMPRODUCT.
- 4Always verify against your jurisdiction's current tax tables — rates change annually.
Tips
- For maintainability, build the tax brackets in a reference table and use a SUMPRODUCT formula: it handles any number of bands without changing the formula structure.
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Frequently asked
How do I adapt this for a different country's tax bands?
Replace the threshold and rate values with your jurisdiction's current brackets. The nested IF structure stays the same; only the numbers change.
Can I calculate effective tax rate from this?
Yes — divide the tax by income: =B2/A2 and format as Percentage.
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