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Accounting Articles > Trusts:
What are the income tax rates?
In the matter of trusts, the catch is that the income taxes are high.
As of
2006, at the Federal level alone, a trust begins to pay income tax at $2,050
in income (15%), and reaches the highest tax bracket at $10,050 (35%). Most
taxpayers don't even pay income taxes on the first $10,000 of their personal
income tax returns. From a tax planning perspective, it's generally best to
get the income out of the trust prior to the end of the year. Tax rates are
much lower at the individual level. But, in most cases, the income tax on a
trust is pennies on the dollar compared to what the estate tax would have been.
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