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Tax Calculation with Three Tax Brackets Taxable income $120,000 Lower Income threshold for bracket 2 $40,000 Lower Income threshold for bracket 3 $100,000 Income tax rate for bracket 2 20% Income tax rate for bracket 3 25% Income tax $17,000

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Page 1: Nested If

Tax Calculation with Three Tax Brackets

Taxable income $120,000

Lower Income threshold for bracket 2 $40,000

Lower Income threshold for bracket 3 $100,000

Income tax rate for bracket 2 20%

Income tax rate for bracket 3 25%

Income tax $17,000

Page 2: Nested If

Tax Calculation with Three Tax Brackets Using Cell Names

Taxable income $120,000 <== Income

Lower Income threshold for bracket 2 $40,000 <== Thresh2

Lower Income threshold for bracket 3 $100,000 <== Thresh3

Income tax rate for bracket 2 20% <== Rate2

Income tax rate for bracket 3 25% <== Rate3

Income tax $17,000

Page 3: Nested If

Decision Tree for Calculating Income Tax with Three Tax Brackets

Yes Tax = 0

income <= thresh2?

Yes Tax = rate2* income over thresh2

No income <= thresh3?

No Tax= (rate2* thresh3 less thresh2) + (rate3*income over thresh3)


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