The formulas
- Ordinary: 10% to $3,300; 24% to $11,700; 35% to $16,000; 37% above
- Qualified dividends and gain: 0% up to $3,300 of total taxable income, 15% up to $16,250, 20% above
- Tax = lesser of the split computation or regular tax on all taxable income
How it works
Rev. Proc. 2025-32 sets the 2026 brackets for estates and trusts: 10% on the first $3,300, 24% to $11,700, 35% to $16,000 and 37% above. Qualified dividends and net capital gain stack on top of ordinary income, taxed at 0% up to $3,300 and 15% up to $16,250 of taxable income.
Compressed brackets reach 37% at $16,000, so income kept in a trust is taxed far faster than the same income on an individual return. Distributions carry income out to beneficiaries through the distribution deduction. The net investment income tax applies on top; see the trust NIIT calculator.
Illustrative figures only. Check the result against your firm's methodology before relying on it.
Common questions
Where does taxable income come from?
Form 1041 line 23: total income less deductions, the distribution deduction and the exemption.
Does this apply to grantor trusts?
No. Grantor trust income is taxed to the grantor on an individual return.
What is the unrecaptured 1250 or collectibles rate?
Those gains have 25% and 28% maximum rates and are not modeled here.
Sources
Runs in your browser. The figures you type are not sent to CORAA or stored. Check the result against your firm's methodology before relying on it.