Income tax withholding tables in Excel?
 

How do I set up income tax withholding tables and then reference the correct
amount (vlookup?) in a payroll worksheet I am creating?
--
Al H.

Answer: Income tax withholding tables in Excel?
 

Hi Al,

Setting up income tax withholding tables in Excel is actually quite simple. Here are the steps you can follow:

1. Open a new Excel worksheet and create a table with the following columns: "Taxable Income", "Tax Rate", "Base Tax", and "Excess Rate". You can find the tax rates and brackets for your state or country online.
   
2. Fill in the table with the appropriate tax rates and brackets for your state or country. For example, if the taxable income is between $0 and $10,000, the tax rate might be 10%, the base tax might be $0, and the excess rate might be $0.10 for every dollar over $0.
   
3. Once you have created your table, you can use the
   Formula:

   ---

   VLOOKUP 


   ---

   function to reference the correct amount in your payroll worksheet. For example, if you have an employee with a taxable income of $50,000, you can use the
   Formula:

   ---

   VLOOKUP 


   ---

   function to find the tax rate and calculate the amount of tax owed.
   
4. To use the
   Formula:

   ---

   VLOOKUP 


   ---

   function, you will need to specify the lookup value (in this case, the taxable income), the table array (the table you created in step 1), the column index number (the column that contains the tax rate), and the range lookup (FALSE to ensure an exact match).
   
5. Here is an example formula you can use in your payroll worksheet: =VLOOKUP(B2,Table,2,FALSE)*B2-VLOOKUP(B2,Table,3,FALSE)
   
   In this formula, B2 is the cell that contains the taxable income, "Table" is the name of the table you created in step 1, 2 is the column index number for the tax rate, and 3 is the column index number for the base tax. The formula calculates the tax owed by multiplying the taxable income by the tax rate and subtracting the base tax.
   

This is what I use (and I assume we are talking United States):

1) Create a series of tables based on the "Percentage Method of Withholding"
(Method 1) tables from the most recent Publication 15 (or addendum) at
www.IRS.gov. My tables are a simplified restatement of what the IRS
provides. There are only 3 columns: TaxableIncomeOver, IsTaxableAt and
PlusLowerBracketTaxesOf. The current tables have 7 lines each. Name the
range of each table: 2005MarriedWeekly, 2005SingleBiWeekly, etc. I had a
reason to store multiple years and frequencies, but you may not need to. (I
was calculating the exact amount of my next paycheck but I had more than one
employer at one point and they didn't switch over to new rates at the same
time, their paycheck frequencies were different and one never managed to
accept my divorce). *Be sure your restated tables are accurate*.

2) To calculate FederalWithholding tax you'll need to know (per person):
GrossPay, #Allowances, MaritalStatus, PayFrequency, TaxYear.
3) You also need some way of determining the current $ of
WithholdingAllowanceValue, which vary by pay frequency and TaxYear. (I use
another table).
4) TaxableIncome = GrossPay - (#Allowances x WithholdingAllowanceValue)
5) TableName = TaxYear&MaritalStatus&PayFrequency
6) FederalWithholding = ((TaxableIncome -
vlookup(TaxableIncome,TableName,1))*vlookup(Taxabl eIncome,TableName,2))+vlookup(TaxableIncome,TableN ame,3)

#6 can be restated: ((TaxableIncome-TaxableIncomeOver) * IsTaxableAt) +
PlusLowerBracketTaxesOf

Add in SocialSecurity, Medicare & State tax and I'm always within a penny of
whatever ADP (or whoever) calculates.

HTH,
George Nicholson


"Al H." wrote in message
...
How do I set up income tax withholding tables and then reference the
correct
amount (vlookup?) in a payroll worksheet I am creating?
--
Al H.

George,

Would it be possible to get a copy of your worksheet, my Excel skills are
lacking.

regards,

Bruce Hawkins

"George Nicholson" wrote:

This is what I use (and I assume we are talking United States):

1) Create a series of tables based on the "Percentage Method of Withholding"
(Method 1) tables from the most recent Publication 15 (or addendum) at
www.IRS.gov. My tables are a simplified restatement of what the IRS
provides. There are only 3 columns: TaxableIncomeOver, IsTaxableAt and
PlusLowerBracketTaxesOf. The current tables have 7 lines each. Name the
range of each table: 2005MarriedWeekly, 2005SingleBiWeekly, etc. I had a
reason to store multiple years and frequencies, but you may not need to. (I
was calculating the exact amount of my next paycheck but I had more than one
employer at one point and they didn't switch over to new rates at the same
time, their paycheck frequencies were different and one never managed to
accept my divorce). *Be sure your restated tables are accurate*.

2) To calculate FederalWithholding tax you'll need to know (per person):
GrossPay, #Allowances, MaritalStatus, PayFrequency, TaxYear.
3) You also need some way of determining the current $ of
WithholdingAllowanceValue, which vary by pay frequency and TaxYear. (I use
another table).
4) TaxableIncome = GrossPay - (#Allowances x WithholdingAllowanceValue)
5) TableName = TaxYear&MaritalStatus&PayFrequency
6) FederalWithholding = ((TaxableIncome -
vlookup(TaxableIncome,TableName,1))*vlookup(Taxabl eIncome,TableName,2))+vlookup(TaxableIncome,TableN ame,3)

#6 can be restated: ((TaxableIncome-TaxableIncomeOver) * IsTaxableAt) +
PlusLowerBracketTaxesOf

Add in SocialSecurity, Medicare & State tax and I'm always within a penny of
whatever ADP (or whoever) calculates.

HTH,
George Nicholson


"Al H." wrote in message
...
How do I set up income tax withholding tables and then reference the
correct
amount (vlookup?) in a payroll worksheet I am creating?
--
Al H.

IRS Withholding Tables
 

The IRS Tax Withholding tables in excel format from Publication 15 are available @ https://www.adduptivity.com/category/irs

They are the percentage method tables (#1-8). I use them for my own payroll calculator.

Calculate total income tax on excel
 

To calculate total income tax based on multiple tax brackets, you can use VLOOKUP. I hope the following formula helps:

=VLOOKUP(inc,rates,3,1)+(inc-VLOOKUP(inc,rates,1,1))*VLOOKUP(inc,rates,2,1)

Regards,
Jerry M.