Progress Tax Calculator

[Matt]

Hello Everyone

I'm trying to come up with an efficient formulae or function to calculate tax
The problem I have is that the tax is progressive. As below
the first 20,000 is taxed at 5%
the next 20,000 is taxed at 6%
the next 20,000 is taxed at 7%
the next 20,000 is taxed at 8%
the next 20,000 is taxed at 9%
more than 100,000 is taxed at 10%

I'm trying to do a formula like below
Cell B3 is my taxable amount
Cell B5 =IF(B$3>20000,20000*0.05,B$3*0.05)
Cell B6 =IF(B$3>40000,40000*0.05,(B$3-20000)*0.05)

This gives me a problem in that for 35k say, I end up with a negative number
for the second part in cell B6
My other issue is that each calculation will take up 6 rows on my
spreadsheet. I was hoping to set up a function that could do this in a cell,
but even the simple stage defeats me at the moment.

Thanks for reading this far and any help would be greatly appreciated

Thank you

 

[Ron Coderre]

Perhaps something like this:

With a value in A1

The tax rate for A1 is:
B1: =MIN(4%+CEILING(A1/20000,1)/100,10%)

Is that something you can work with?
***********
Regards,
Ron

XL2002, WinXP

 

[Toppers]

Take a look at:

http://www.mcgimpsey.com/excel/variablerate.html

HTH

 

[Bearacade]

Try this...

=IF(B5>100000, (B5-100000)*0.1+7000, IF(B5>80000,(B5-80000)*0.09+5200,
IF(B5>60000,(B5-60000)*0.08+3600, IF(B5>40000,(B5-40000)*0.07+2200,
IF(B5>20000,(B5-20000)*0.06+1000, B5*.05)))))

Anything over 100K, you are basically paying $7000 on the first 100K
and then 10% on the rest, Anything from 80K - 100K, you are paying
5200 on the first 80K and 9% on the remainder and so on...

HTH

 

[David Biddulph]

Hello Everyone

I'm trying to come up with an efficient formulae or function to calculate
tax
The problem I have is that the tax is progressive. As below
the first 20,000 is taxed at 5%
the next 20,000 is taxed at 6%
the next 20,000 is taxed at 7%
the next 20,000 is taxed at 8%
the next 20,000 is taxed at 9%
more than 100,000 is taxed at 10%

I'm trying to do a formula like below
Cell B3 is my taxable amount
Cell B5 =IF(B$3>20000,20000*0.05,B$3*0.05)
Cell B6 =IF(B$3>40000,40000*0.05,(B$3-20000)*0.05)

This gives me a problem in that for 35k say, I end up with a negative
number
for the second part in cell B6
My other issue is that each calculation will take up 6 rows on my
spreadsheet. I was hoping to set up a function that could do this in a
cell,
but even the simple stage defeats me at the moment.

Thanks for reading this far and any help would be greatly appreciated

Try
=5%*B3+1%*MAX(B3-20000,0)+1%*MAX(B3-40000,0)+1%*MAX(B3-60000,0)+1%*MAX(B3-80000,0)+1%*MAX(B3-100000,0)

 

[Toppers]

Based on the McGimpsey formula:

=SUMPRODUCT(--(A1>{0;20000;40000;60000;80000;100000}),
(A1-{0;20000;40000;60000;80000;100000}), {0.05;0.01;0.01;0.01;0.01;0.01})

HTH

 

[Ron Coderre]

After reading the other responses, I KNEW I must have mis-read the post.

Here's a better formula:

For a taxable value in B3

The tax calculation would be:
=SUMPRODUCT(IF((B3/10000-{0,2,4,6,8,10})>0,((B3/10000-{0,2,4,6,8,10})*10000)*{5,1,1,1,1,1}/100,0))

Does that help?
***********
Regards,
Ron

XL2002, WinXP

 

[Ron Coderre]

Shorter formula:

=SUM(((B3/10000-{0,2,4,6,8,10})>0)*(B3/10000-{0,2,4,6,8,10})*10000*({5,1,1,1,1,1}/100))
***********
Regards,
Ron

XL2002, WinXP

 

[Matt]

Hi Ron

Thank you for this, a very effective formula I must say!
Solves my problem perfectly

Thanks again

Matt

 

[Matt]

Thanks David

Helped me crack this problem, though to make it work I had to use MIN and MA
=(5%*MIN(H$5,20000)+6%*MIN(MAX(H$5-20000,0),20000)+7%*MIN(MAX(H$5-40000,0),20000)+8%*MIN(MAX(H$5-60000,0),20000)+9%*MIN(MAX(H$5-80000,0),20000)+10%*MAX(H$5-100000,0))

 

[Matt]

Thanks Toppers

This is a little easier to understand for SUMPRODUCT newby's like myself

Matt

Based on the McGimpsey formula:

=SUMPRODUCT(--(A1>{0;20000;40000;60000;80000;100000}),
(A1-{0;20000;40000;60000;80000;100000}), {0.05;0.01;0.01;0.01;0.01;0.01})

HTH

 

[joeu2004]

Try
=5%*B3+1%*MAX(B3-20000,0)+1%*MAX(B3-40000,0)+1%*MAX(B3-60000,0)+
1%*MAX(B3-80000,0)+1%*MAX(B3-100000,0)

[....]
Helped me crack this problem, though to make it work I had to use MIN and MAX
=(5%*MIN(H$5,20000)+6%*MIN(MAX(H$5-20000,0),20000)+7%*MIN(MAX(H$5-40000,0),20000)+
8%*MIN(MAX(H$5-60000,0),20000)+9%*MIN(MAX(H$5-80000,0),20000)+10%*MAX(H$5-100000,0))

You overlooked the key to the simplicity of David's solution (which is
the one I always use myself): except for the first pct factor (5%),
you multiply MAX(...) by the __incremental__ pct factor. For example,
if the "marginal rates" were 5%, 6%, 8%, 11% and 15%, you would write
=5%*... + 1%*max(...) + 2%*max(...) + 3%*max(...) + 4%*max(...).
Returning to your example, consider the amount 30000. David's
expression would evaluate to:

=5%*30000 + 1%*max(30000-20000,0)
=5%*30000 + 1%*10000
=5%*20000 + 5%*10000 + 1%*10000
=5%*20000 + 6%*10000

That is the same as your more complicated expression, which would
evaluate to:

=5%*min(30000, 20000) + 6%*min(max(30000-20000,20000), 20000)
=5%*20000 + 6%*10000

 

[Matt]

Ah, I see

Thanks David

Matt

Try
=5%*B3+1%*MAX(B3-20000,0)+1%*MAX(B3-40000,0)+1%*MAX(B3-60000,0)+
1%*MAX(B3-80000,0)+1%*MAX(B3-100000,0)

[....]
Helped me crack this problem, though to make it work I had to use MIN and MAX
=(5%*MIN(H$5,20000)+6%*MIN(MAX(H$5-20000,0),20000)+7%*MIN(MAX(H$5-40000,0),20000)+
8%*MIN(MAX(H$5-60000,0),20000)+9%*MIN(MAX(H$5-80000,0),20000)+10%*MAX(H$5-100000,0))

You overlooked the key to the simplicity of David's solution (which is
the one I always use myself): except for the first pct factor (5%),
you multiply MAX(...) by the __incremental__ pct factor. For example,
if the "marginal rates" were 5%, 6%, 8%, 11% and 15%, you would write
=5%*... + 1%*max(...) + 2%*max(...) + 3%*max(...) + 4%*max(...).
Returning to your example, consider the amount 30000. David's
expression would evaluate to:

=5%*30000 + 1%*max(30000-20000,0)
=5%*30000 + 1%*10000
=5%*20000 + 5%*10000 + 1%*10000
=5%*20000 + 6%*10000

That is the same as your more complicated expression, which would
evaluate to:

=5%*min(30000, 20000) + 6%*min(max(30000-20000,20000), 20000)
=5%*20000 + 6%*10000