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Can you calculate the marginal tax rate in Excel?

Modified on: 2018/07/10
A:

Marginal tax rates are higher for higher-income individuals. Accurate information about current tax brackets is needed to complete the table. American tax information is available from the Internal Revenue Service (IRS) and will be necessary to create a tax table that appropriately calculates U.S. marginal tax rates. To create an Excel spreadsheet that calculates the marginal tax rate, begin by opening a spreadsheet and creating columns entitled "Taxable Income", "Marginal Tax Rate" and "Base Tax". Under the first column, place the year's income maximums for each marginal tax rate. The column should start at the lowest tax bracket and end at the highest bracket. Under the second column, list each tax rate, starting with the lowest. The final column should have minimum tax values for each tax bracket. After filling in the values, a formula to calculate the appropriate values is needed.

To create the formula, choose an income value to apply the calculation to and enter it in cell A11. Under the second column and in the same row as the value that was just entered, type "=VLOOKUP(A11,A3:C8,2)" in cell C11, and save your spreadsheet. This calculation will now apply to values entered in the first two columns in row 11, 12, 13 and so on through your spreadsheet. Note that these calculations only provide a marginal tax rate applied to income and do not factor in individual tax circumstances, such as deductions and taxable income limits. These values result in an approximate tax rate that provide a starting point for personal tax estimates.


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