Income Tax Rates for Trusts and Estates 2016

The IRS recently enacted revenue procedure 2015-53 which updates rules in the tax code that are regularly adjusted due to inflation. Among the changes includes the tax brackets for estate and trust taxable income for 2016.

Important note - estates and trusts pay income tax too!! Income tax is not only paid by individuals.

For tax year 2016, the tax brackets remain at 15%, 25%, 28%, 33%, and 39.6% which is the same as last year. However, when estates and trusts reach the different brackets changes slightly from last year; this result in slightly lower income taxes.

15% Bracket
Taxable income not over $2,550 results in a tax of 15% of the taxable income. 2015 tax year is taxable income over $2,500.

25% Bracket
Taxable income over $2,550, but not over $5,950 results in a tax of $382.50 plus 25% of the excess over $2,550. 2015 tax year is taxable income over $2,500, but not over $5,900 results in a tax of $375 plus 25% of the excess over $2,500.

28% Bracket
Taxable income over $5,950, but not over $9,050 results in a tax of $1,232.50 plus 28% of the excess over $5,950. 2015 tax year is taxable income over $5,900, but not over $9,050 results in a tax of $1,225 plus 28% of the excess over $5,900.

33% Bracket
Taxable income over $9,050, but not over $12,400 results in a tax of $2,100.50 plus 33% of the excess over $9,050. 2015 tax year is taxable income over $9,050, but not over $12,300 results in a tax of $2,107 plus 33% of the excess over $9,050.

39.6% Bracket
Taxable income over $12,400 results in a tax of $3,206 plus 39.6% of the excess over $12,400. 2015 tax year taxable income over $12,300 results in a tax of $3,179.50 plus 39.6% of the excess over $12,300.

Examples

Some examples of taxable income calculations in 2015 versus 2016 follow:

  • Taxable income of $2,525 in 2015 the tax is $381.25 versus $378.00 in 2016.
  • Taxable income of $5,900 in 2015 the tax is $1,225.00 versus $1,220.00 in 2016.
  • Taxable income of $5,925 in 2015 the tax is $1,232.00 versus $1,226.25 in 2016.
  • Taxable income of $9,100 - in 2015 the tax is $2,123.50 versus $2,117.00 in 2016.
  • Taxable income of $12,500 in 2015 the tax is $3,258.70 versus $3,245.60 in 2016.

Aaron E. Futterman, CPA, Esq. is a partner in the law firm of Futterman & Lanza, LLP with offices in Smithtown, NY and clients throughout Suffolk, Nassau, Queens, Brooklyn, Bronx, Richmond, New York, Westchester and Rockland Counties. He concentrates his practice to Elder Law, Medicaid Planning, Medicaid Applications, Estate Planning, Probate, Estate Taxes, and Estate Administration.

The IRS recently enacted revenue procedure 2015-53 which updates rules in the tax code that are regularly adjusted due to inflation. Among the changes includes the tax brackets for estate and trust taxable income for 2016.

Important note - estates and trusts pay income tax too!! Income tax is not only paid by individuals.

For tax year 2016, the tax brackets remain at 15%, 25%, 28%, 33%, and 39.6% which is the same as last year. However, when estates and trusts reach the different brackets changes slightly from last year; this result in slightly lower income taxes.

15% Bracket
Taxable income not over $2,550 results in a tax of 15% of the taxable income. 2015 tax year is taxable income over $2,500.

25% Bracket
Taxable income over $2,550, but not over $5,950 results in a tax of $382.50 plus 25% of the excess over $2,550. 2015 tax year is taxable income over $2,500, but not over $5,900 results in a tax of $375 plus 25% of the excess over $2,500.

28% Bracket
Taxable income over $5,950, but not over $9,050 results in a tax of $1,232.50 plus 28% of the excess over $5,950. 2015 tax year is taxable income over $5,900, but not over $9,050 results in a tax of $1,225 plus 28% of the excess over $5,900.

33% Bracket
Taxable income over $9,050, but not over $12,400 results in a tax of $2,100.50 plus 33% of the excess over $9,050. 2015 tax year is taxable income over $9,050, but not over $12,300 results in a tax of $2,107 plus 33% of the excess over $9,050.

39.6% Bracket
Taxable income over $12,400 results in a tax of $3,206 plus 39.6% of the excess over $12,400. 2015 tax year taxable income over $12,300 results in a tax of $3,179.50 plus 39.6% of the excess over $12,300.

Examples

Some examples of taxable income calculations in 2015 versus 2016 follow:

  • Taxable income of $2,525 in 2015 the tax is $381.25 versus $378.00 in 2016.
  • Taxable income of $5,900 in 2015 the tax is $1,225.00 versus $1,220.00 in 2016.
  • Taxable income of $5,925 in 2015 the tax is $1,232.00 versus $1,226.25 in 2016.
  • Taxable income of $9,100 - in 2015 the tax is $2,123.50 versus $2,117.00 in 2016.
  • Taxable income of $12,500 in 2015 the tax is $3,258.70 versus $3,245.60 in 2016.

Aaron E. Futterman, CPA, Esq. is a partner in the law firm of Futterman & Lanza, LLP with offices in Smithtown, NY and clients throughout Suffolk, Nassau, Queens, Brooklyn, Bronx, Richmond, New York, Westchester and Rockland Counties. He concentrates his practice to Elder Law, Medicaid Planning, Medicaid Applications, Estate Planning, Probate, Estate Taxes, and Estate Administration.

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