VBA Geek, I tested your formula too and it seemed to work
I'm surprised by that statement since VBA Geek's own example is incorrect. The tax on 100,000 is 16,712.50, not 19,435.
My number is based on the tax rate schedule found in the 2014 Form 1040-ES at www.irs.gov.
The tax on 100,000 is 10,162.50 plus 25% of the amount over 73,800. Thus, 10162.50 + 25%*(100000 - 73800) = 10162.50 + 6550.00 = 16,712.50.
joeu2004, I tested what you wrote and it seems to work properly for all different amounts! Thank you.
You're welcome. But the SUMPRODUCT formula is confusing to many. If you prefer, the following is an alternative formula that follows the IRS instructions more literally.
[TABLE="class: grid, width: 650"]
<tbody>[TR]
[TD="align: right"]
[/TD]
[TD="align: center"]
A
[/TD]
[TD="align: center"]
B
[/TD]
[TD="align: center"]
C
[/TD]
[TD="colspan: 10, align: center"]
D
[/TD]
[/TR]
[TR]
[TD="align: right"]
1
[/TD]
[TD]
Taxl inc
[/TD]
[TD="align: right"]
100,000.00
[/TD]
[TD]
[/TD]
[TD="colspan: 10"]
[/TD]
[/TR]
[TR]
[TD="align: right"]
2
[/TD]
[TD]
Tax[/TD]
[TD="align: right"]
16,712.50[/TD]
[TD]
[/TD]
[TD="colspan: 10"]
=ROUND(VLOOKUP(B1,$A$5:$C$11,2)
+ VLOOKUP(B1,$A$5:$C$11,3)*(B1-VLOOKUP(B1,$A$5:$C$11,1)),2)[/TD]
[/TR]
[TR]
[TD="align: right"]
3
[/TD]
[TD]
[/TD]
[TD]
[/TD]
[TD]
[/TD]
[TD="colspan: 10"]
[/TD]
[/TR]
[TR]
[TD="align: right"]
4
[/TD]
[TD="align: right"]
Over--[/TD]
[TD="align: right"]
Tax is--[/TD]
[TD="align: right"]
Plus
Excess
Times--[/TD]
[TD="colspan: 10"]
[/TD]
[/TR]
[TR]
[TD="align: right"]
5
[/TD]
[TD="align: right"]
0[/TD]
[TD="align: right"]
0.00[/TD]
[TD="align: right"]
10.00%[/TD]
[TD="colspan: 10"]
[/TD]
[/TR]
[TR]
[TD="align: right"]
6
[/TD]
[TD="align: right"]
18,150[/TD]
[TD="align: right"]
1,815.00[/TD]
[TD="align: right"]
15.00%[/TD]
[TD="colspan: 10"]
[/TD]
[/TR]
[TR]
[TD="align: right"]
7
[/TD]
[TD="align: right"]
73,800[/TD]
[TD="align: right"]
10,162.50[/TD]
[TD="align: right"]
25.00%[/TD]
[TD="colspan: 10"]
[/TD]
[/TR]
[TR]
[TD="align: right"]
8
[/TD]
[TD="align: right"]
148,850[/TD]
[TD="align: right"]
28,925.00[/TD]
[TD="align: right"]
28.00%[/TD]
[TD="colspan: 10"]
[/TD]
[/TR]
[TR]
[TD="align: right"]
9
[/TD]
[TD="align: right"]
226,850[/TD]
[TD="align: right"]
50,765.00[/TD]
[TD="align: right"]
33.00%[/TD]
[TD="colspan: 10"]
[/TD]
[/TR]
[TR]
[TD="align: right"]
10
[/TD]
[TD="align: right"]
405,100[/TD]
[TD="align: right"]
109,587.50[/TD]
[TD="align: right"]
35.00%[/TD]
[TD="colspan: 10"]
[/TD]
[/TR]
[TR]
[TD="align: right"]
11
[/TD]
[TD="align: right"]
457,600[/TD]
[TD="align: right"]
127,962.50[/TD]
[TD="align: right"]
39.60%[/TD]
[TD="colspan: 10"]
[/TD]
[/TR]
</tbody>[/TABLE]
The numbers in the table in A5:C11 are taken directly from the IRS tax rate schedule in the 2014 Form 1040-ES.
The formula in B2 is shown in D2.
Note: If the taxable income were 148,850, for example, the VLOOKUP formula would use the numbers in row 8. Technically, the numbers in row 7 apply, since 148,850 is not "over 148,850". However, the difference should not matter in a properly-constructed marginal rate schedule, since the amount in B8 should be the tax we would compute based on row 7.
(Admittedly, a few years ago, I encountered a state marginal tax rate schedule that was not "properly constructed". However, it was obviously a mistake, and the state corrected it some time later.)