### How a Nested IF Function Works

Related Tutorial: **Excel IF Function Step by Step Tutorial**

The Excel IF function adds flexibility to your spreadsheets by introducing decision making. It does this by testing a specified condition in your spreadsheet to see if it is true or false.

If the condition is true, the function will carry out one action. If the condition is false, it will carry out a different action.

The function allows you to specify what actions it should carry out depending on whether the condition is true or not. These actions can include executing a formula, inserting a text statement, or leaving the target cell blank.

The usefulness of the IF function can be extended by using one or more **Nested** IF functions. A nested function in Excel refers to one function being placed inside another.

Nested IF functions increase the number of possible outcomes that can be tested for and increase the number of actions that can be taken to deal with these outcomes.

In Excel 2010 and 2007, sixty four IF functions can be nested inside one another.

### Nested IF Function Step by Step Tutorial

This tutorial uses a nested IF function (one IF function inside another) to calculate the annual deduction for employees based on their yearly salary.

The function tests to see if an employee's annual salary is in one of three categories:

- less than $30,000
- between $30,000 and $49,999
- $50,000 or more

Depending on the result, different deduction rates are used by the nested IF function in calculating the employee's annual deduction.

Following the steps in the tutorial topics below walks you through creating and using the nested IF function seen in the image above to calculate the deduction for a number of employees.

**Tutorial Topics**

- Entering the Tutorial Data
- Starting the First IF Function
- Entering the First Logical_test Argument
- Entering the First Value_if_true Argument
- Starting the Nested IF Function
- Entering the Nested IF Function Logical_test Argument
- Entering the Nested IF FunctionValue_if_true Argument
- Entering the Nested IF Function Value_if_false Argument and Completing the Function
- Copying the Nested IF Function using the Fill Handle