A Google Sheets income tax calculator is a spreadsheet tool designed to help individuals or businesses estimate their income tax liability based on their income, deductions, and applicable tax rates.
It utilizes the functionalities and formulas within Google Sheets to automate the calculation process, making it easier for users to understand how much tax they need to pay or might get back as a refund.
Follow the steps below to easily create an income tax calculator in Google Sheets.
List your income sources in column A and their amounts in column B.
To calculate your total income, sum the amounts in column B. If your income is listed from B2 to B4, the formula is =SUM(B2:B4).
In columns D and E, list your deductible expenses and their amounts, respectively.
Sum the amounts of deductible expenses in column E. If your expenses are listed from E2 to E3, the formula is =SUM(E2:E3).
Subtract total deductions from total income to find taxable income. If your total income is in B5 and total deductions are in E4, type '=B5-E4'.
List the tax brackets and corresponding rates in a new section of the sheet.
For the simplified tax rates provided, you'll need a formula that calculates the tax based on the brackets. Here's a simplified approach to apply the correct tax rates:
=IF(G2>40000, (G2-40000)*0.3 + 20000*0.2 + 20000*0.1, IF(G2>20000, (G2-20000)*0.2 + 20000*0.1, G2*0.1))
Assuming G2 is your taxable income, this formula calculates the tax owed by applying the different tax rates to the income falling within each bracket.
The formula above gives you the total tax owed based on the taxable income. Display this in a clear and labeled cell.
Test your calculator with different income and deduction scenarios to ensure it works as expected.
Get a copy of our free income tax calculator template in Google Sheets here.
We hope that you now have a better understanding of what a Google Sheets income tax calculator is and how to create an income tax calculator in Google Sheets. If you enjoyed this article, you might also like our article on how to fix Google Sheets when it keeps crashing or our article on how to split a cell diagonally in Google Sheets.
