Please critique this tax calculation UDF

JenniferMurphy · Apr 27, 2022

I would appreciate any comments on this UDF to calculate taxes. Once I am sure that it is working, I will move the constants (brackets and rates) to the calling sheet and pass them to the UDF. I'll also have the calling sheet calculate the cumulative maximum taxes for each bracket, so the UDF doesn't have to do it over and over.

VBA Code:

Function TaxCalc(pIncome As Double) As Double

Dim BracketTop(0 To 7) As Double  'The upper end of the brackets
Dim BracketWid(1 To 6) As Double  'The width of each bracket
Dim Rate(1 To 7) As Double        'The tax rates in each bracket

' Bracket constants. Move these to the sheet and pass them as a range
BracketTop(0) = 0
BracketTop(1) = 10000:  Rate(1) = 0.1   '10% in bracket 1
BracketTop(2) = 40000:  Rate(2) = 0.12  '12% in bracket 2
BracketTop(3) = 86000:  Rate(3) = 0.22  '22% in bracket 3
BracketTop(4) = 165000: Rate(4) = 0.24  '24% in bracket 4
BracketTop(5) = 209000: Rate(5) = 0.32  '32% in bracket 5
BracketTop(6) = 524000: Rate(6) = 0.35  '35% in bracket 6
BracketTop(7) = 0:      Rate(7) = 0.37  '37% in bracket 7

'The cumulative maximum taxes. Do this in the sheet, too
Dim CumTax(0 To 6) As Double
CumTax(0) = 0
Dim iLoop As Long
For iLoop = 1 To 7
  If iLoop = 7 Or pIncome <= BracketTop(iLoop) Then
    TaxCalc = CumTax(iLoop - 1) + (pIncome - BracketTop(iLoop - 1)) * Rate(iLoop)
    Exit For
  End If
  BracketWid(iLoop) = BracketTop(iLoop) - BracketTop(iLoop - 1)
  CumTax(iLoop) = CumTax(iLoop - 1) + BracketWid(iLoop) * Rate(iLoop)
Next iLoop

End Function

Here's a minisheet calling it.

Wages by Profession.xlsx

C

D

E

3

Gross Income

Taxes

%

4

$0.00

#DIV/0!

5

$1,000.00

$100.00

10.00%

6

$10,000.00

$1,000.00

10.00%

7

$11,000.00

$1,120.00

10.18%

8

$20,000.00

$2,200.00

11.00%

9

$40,000.00

$4,600.00

11.50%

10

$86,000.00

$14,720.00

17.12%

11

$165,000.00

$33,680.00

20.41%

12

$209,000.00

$47,760.00

22.85%

13

$524,000.00

$158,010.00

30.15%

14

$1,000,000.00

$334,130.00

33.41%

15

$5,000,000.00

$1,814,130.00

36.28%

Sheet5

Cell Formulas
Range	Formula
D4:D15	D4	=taxcalc(C4)
E4:E15	E4	=[@Taxes]/[@[Gross Income]]

Thanks

JenniferMurphy · Apr 28, 2022

I have replaced the code that calculates the tax bracket information with a table in the calling sheet. The UDF code is now simpler.

VBA Code:

Function TaxCalc(pIncome As Double, pBrackets As Range) As Double

' Define the columns in the tax bracket table (pBrackets)
Const iTop As Long = 2      'Column 2: Top incomes
Const iRate As Long = 3     'Column 3: Tax rates
' Column 4, bracket width, is not used here
Const iCumTax As Long = 5   'Column 5: Cum taxes

Dim iLoop As Long       'Loop index
For iLoop = 2 To 8      'Bracket 1 is in row 2
  'If we are in the top bracket or the income is within this bracket,
  '.calculate the tax and exit
  If iLoop = 8 Or pIncome <= pBrackets(iLoop, iTop) Then
    TaxCalc = pBrackets(iLoop - 1, iCumTax) _
            + (pIncome - pBrackets(iLoop - 1, iTop)) * pBrackets(iLoop, iRate)
    Exit For
  End If
Next iLoop

End Function

And here's a minisheet using it.

Wages by Profession.xlsx