Update: Here are the 2019 income tax rates for trusts and estates and the 2020 income tax rates for tusts and estates.
The IRS recently enacted revenue procedure 2016-55 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 2017.
Important note – estates and trusts pay income tax too!! Income tax is not only paid by individuals.
For tax year 2017, 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. 2016 tax year is taxable income over $2,550 – the same as last year.
25% Bracket
Taxable income over $2,550, but not over $6,000 results in a tax of $382.50 plus 25% of the excess over $2,550. 2016 tax year is taxable income over $2,500, but not over $5,950 results in a tax of $382.50 plus 25% of the excess over $2,550.
28% Bracket
Taxable income over $6,000, but not over $9,150 results in a tax of $1,245.00 plus 28% of the excess over $6,000. 2016 tax year is 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.
33% Bracket
Taxable income over $9,150, but not over $12,500 results in a tax of $2,127.00 plus 33% of the excess over $9,150. 2016 tax year is taxable income over $9,050, but not over $12,400 results in a tax of $2,100.00 plus 33% of the excess over $9,050.
39.6% Bracket
Taxable income over $12,500 results in a tax of $3,232.50 plus 39.6% of the excess over $12,500. 2016 tax year taxable income over $12,400 results in a tax of $3,206.00 plus 39.6% of the excess over $12,400.
Examples
Some examples of taxable income calculations in 2016 versus 2017 follow:
Taxable income of $2,550 in 2016 the tax is $382.50 and is also $382.50 in 2017.
Taxable income of $6,000 in 2016 the tax is $1,246.50 versus $1,245.00 in 2017.
Taxable income of $6,100 in 2016 the tax is $1,274.50 versus $1,273.00 in 2017.
Taxable income of $9,150 in 2016 the tax is $2,133.50 versus $2,127 in 2017.
Taxable income of $12,500 in 2016 the tax is $3,245.60 versus $3,232.50 in 2017.
Aaron E. Futterman, CPA, Esq. is a partner in the law firm of 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.