Summary

This example shows how to set up simple formula using the IF function to calculate a tax amount with both fixed and variable components. In the example shown, the formula in C5 is:

=IF(B5<limit,B5*rate,(B5-limit)*rate+fixed)

in a worksheet with the following named ranges: rate = F4, fixed = F5, limit = F6.

The rules of this problem are as follows:

  1. If amount is less than $1000, tax is amount * 20%.
  2. If amount is greater than or equal to $1000, tax is $200 + (amount over 1000) *20%

Generic formula

=IF(A1<limit,A1*rate,(A1-limit)*rate+fixed)

Explanation 

The core of this formula is a single IF statement that checks the amount in column B against the base limit:

=IF(B5<limit

If TRUE, the formula simply multiplies the amount in B5 by tax rate:

B5*rate

If FALSE, the formula applies the tax rate to the amount over 1000, then adds the fixed amount:

(B5-limit)*rate+fixed)
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Dave Bruns

Hi - I'm Dave Bruns, and I run Exceljet with my wife, Lisa. Our goal is to help you work faster in Excel. We create short videos, and clear examples of formulas, functions, pivot tables, conditional formatting, and charts.