The last portion of the SUMPRODUCT function takes into account differential (or incremental) rates to arrive at the tiered structure.

Hence, as in your example all of 900,000 is multiplied by 2.5% and then the excess of 60000 (900000 less 840000) is multiplied by the differential rate i.e. 0.25%. Then they are summed together.

The differentail rates can be negative too giving you a sliding scale structure.