What Are Typical Tax Rates on an Irrevocable Trust?


Quick Answer

Typical tax rates on an irrevocable trust are 15 percent on $0 to $2,500, 25 percent on $2,501 to $5,800, 28 percent on $5,801 to $8,900, 33 percent on $8,901 to $12,150, and 39.6 percent on more than $12,150. The income tax system is progressive in that income is taxed in layers, with a higher tax rate applied to each layer, notes FederalReserve.gov.

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Full Answer

Trustees should balance capital gains and losses to reduce the net tax burden and limit tax liabilities by bunching capital gains into a given year to avoid hitting the top bracket. It is also important for trustees to choose a quality adviser, trust tax attorney, and trust accountant, notes AltmanAssociates.net.

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