Nested IF in Excel

Nesting means putting a formula inside another formula, such as an IF whose "false" branch is another IF, and so on. A little nesting is essential. A lot is where models go to die. The tiered rate written as nested IFs looks like this:

=IF(B2>=1000000, 0.12, IF(B2>=600000, 0.08, IF(B2>=300000, 0.05, 0)))

That's three IFs deep and still just about readable. But each extra tier adds another nested IF and another closing parenthesis to get right. At five or six levels the formula becomes a wall of ))))) that no one, including you next month, can safely read or edit. Excel permits up to 64 levels of nesting, and the fact that it permits 64 doesn't mean 8 is wise. The professional instinct is to treat deep nesting as a code smell. It signals that the formula wants to become something else. You have four escape routes, roughly in order of preference:

1. IFS. For the specific case of many ordered thresholds, IFS flattens the nest into one readable left-to-right list, as shown in IF function in Excel. Reach for it first when the nest is a ladder of IFs.
2. A lookup table. When the branches map a value to a result, such as a score to a grade or a sales band to a rate, a small table plus XLOOKUP or INDEX/MATCH is more maintainable than any logic formula. Changing a rate then means editing a cell in a table instead of surgically editing a formula. Professionals handle tax brackets and commission schedules in real models this way.
3. A helper column. Break one monstrous formula into two or three simple columns, each doing one comprehensible step, then reference the last one. Helper columns are no confession of weakness. In a shared model they are a kindness, because each column can be audited on its own. Hide or group them if they clutter the exhibit.
4. LET. When the nesting exists because a sub-expression repeats, name it once with LET and the nest often collapses on its own.

When should you stop nesting IFs?

The governing principle is that a formula should be readable by a colleague in one pass. If it isn't, the problem is your formula, and one of the four routes above will fix it. "When to stop nesting" has a concrete answer you can adopt today. Past three levels of IF, stop and ask whether an IFS, a lookup table, a helper column, or a LET says the same thing more clearly.

The answer is almost always yes.