When an irrevocable trust (without grantor trust language) or an estate owns assets that generate taxable income the following tax rates apply:
|Taxable Income||Base Amountof Tax||Plus||Rate on Excess (%) (Tax Bracket)||Of the Amount Over ($)|
|0 to 2,300||0||+||15||0|
|2,301 to 5,350||345.00||+||25||2,300|
|5,351 to 8,200||1,107.50||+||28||5,350|
|8,201 to 11,200||1,905.50||+||33||8,200|
Note that estates and trusts reach the highest tax bracket (35%) very quickly (income over $11,200.00) versus single, married filing jointly, or surviving spouses that must have taxable income over $373,651.00 before reaching the 35% tax bracket. Also note that for trusts and estates there is no 10 percent tax bracket which is available for taxpayers that file as single, married filing jointly, surviving spouses, head of household and married filing separately.
If you have any questions about estate or trust income taxes and how they may affect you, your family, or your estate planning please contact Futterman & Lanza at 631-979-4300.