Trust Income Tax Brackets

2026 tables · reviewed September 4, 2026

Shows how much federal income tax a trust pays on income it keeps, and how that compares with a person paying tax on the same money. About

In plain words. A trust is a legal container that holds money for someone. If the trust keeps the interest and dividends it earns instead of paying them out, the trust itself owes income tax, and its tax brackets are squeezed: it reaches the highest rate at about sixteen thousand dollars of income, where a person would need hundreds of thousands. This tool computes that tax, plus the extra 3.8 percent surtax on investment income, and shows the person's tax beside it.

Why it matters. A trustee decides every year whether to keep income in the trust or pay it out. This is the first number in that decision: what keeping it costs.

An example. A trust that keeps $50,000 of dividends owes about $16,400 of income tax plus about $1,300 of surtax. A single person with no other income would owe about $6,500 on the same $50,000.

Where it stops. It does not work out how much of the income can be paid out, the trust's own fees and deductions, state tax, or the lower rates on qualified dividends and long-term gains. The distribute-or-retain tool takes the next step. Everything it leaves out.

Taxable income the trust keeps this year

Treat it as investment income (dividends, interest, capital gains, rents). Then the 3.8% net investment income surtax applies to what the trust keeps above $16,000.Most trust income is investment income. Uncheck this for income that is not.

Federal tax if the trust keeps the income: $17,723; $16,431 income tax plus $1,292 surtax · 35.4% of the income
Federal tax if a single person had the same income: $5,752; 11.5% of the income · assumes no other income
Federal tax if a married couple had the same income: $5,504; 11.0% of the income · filing jointly, no other income

Past $16,000, every extra dollar the trust keeps is taxed at 37% plus the 3.8% surtax. A single person does not reach 37% until $640,600. A married couple filing jointly does not reach it until $768,700.

This uses ordinary income rates with no deductions and no state tax, and the two beneficiary columns assume no other income, which is the kindest case for them. It leaves out what happens when the trust pays income out, which is then taxed to the beneficiary instead, the reason the contrast matters. It shows the squeeze on trust brackets, not whether to pay income out. Hypothetical; educational, not advice.

This is a simplified model, not your actual tax return or plan. It only knows what you type in, leaves out rules that may apply to you, and cannot weigh the other facts and trade-offs a real decision depends on. Before you act, talk with a professional who knows your whole situation.

Educational only, not investment, tax, or legal advice. Results are hypothetical estimates that vary with each use and over time and are not guaranteed accurate or complete. Using this tool creates no client relationship with Considerate Capital, and the site that linked here is not affiliated with it. By using it you agree to the tool terms.