Question

In cell H12, write a formula that uses the Alternate 2 flat tax rate to determine the total dollar value of the tax for the income in cell B12. As detailed in the Flat Tax Rate table (cells A1:F4), this tax scheme also calculates taxes by multiplying the total income by the corresponding rate. For example, incomes below $30,000 pay no tax; incomes of at least $30,000 but less than $50,000 pay 6% of the income in taxes; incomes of at least $50,000 but less than $80,000 pay 10% of the income in taxes; income of at least $80,000 but less than $180,000 pay 16% of the income in taxes; and incomes of $180,000 pay a 26% tax rate. Write a formula so that it can be copied down the column, and then copy it to cells H13:H21. 1​

Answer 1

A formula that calculates the tax based on income using a flat tax rate with different income brackets can be created with nested IF statements in Excel. The formula adjusts the tax rate according to the specified income thresholds and can be duplicated across other cells for consistency in calculations.

Step-by-step explanation:

To calculate the total dollar value of the tax using the Alternate 2 flat tax rate for the income in cell B12, you should write a formula in cell H12 that applies the appropriate tax rate based on the income range defined by the Flat Tax Rate table. Here's an example of how you can construct this formula using IF functions to handle the different tax brackets:

=IF(B12>=180000, B12*0.26,
IF(B12>=80000, B12*0.16,
IF(B12>=50000, B12*0.10,
IF(B12>=30000, B12*0.06, 0))))

This formula checks the income in cell B12 against the thresholds provided:

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• If the income is $180,000 or more, it multiplies the income by 26%.
• 
  
• If the income is at least $80,000 but less than $180,000, it multiplies the income by 16%.
• 
  
• If the income is at least $50,000 but less than $80,000, it multiplies the income by 10%.
• 
  
• If the income is at least $30,000 but less than $50,000, it multiplies the income by 6%.
• 
  
• If the income is below $30,000, it sets the tax to 0.

Once created, the formula can be copied down from cells H13 to H21 to calculate taxes for other income values listed in the corresponding B column cells.