2015 Income Tax Brackets for Estates and Trusts

2015 Tax Rates for Trusts

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Estates and trusts that generate income during the year are subject to special tax rates. They're required to file IRS Form 1041, the U.S. Income Tax Return for Estates and Trusts. Each year the estate and trust income tax brackets are adjusted for inflation just like personal income tax brackets.

Which Estates and Trusts Must File Form 1041 in 2015?

The following estates are required to file IRS Form 1041 in 2015: 

  • The estate's gross income for the tax year is $600 or more, or
  • A beneficiary of the estate is a nonresident alien.

The following trusts are required to file IRS Form 1041 in 2015:

2015 Estate and Trust Income Tax Brackets

The Internal Revenue Service announced inflation-adjusted income tax rates and brackets for 2015 in Rev. Proc. 2014-61. Below are the income tax brackets that apply to estates and trusts, including the new top 39.6-percent bracket introduced by the American Taxpayer Relief Act.

If taxable income was:             The tax rate was:

$0 to $2,500                               15 percent of taxable income

$2,501 to $5,900                        $375 plus 25 percent of the amount over $2,500

$5,901 to $9,050                        $1,225 plus 28 percent of the amount over $5,900

$9,051 to $12,300                      $2,107 plus 33 percent of the amount over $9,050

$12,301 or more                        $3,179.50 plus 39.6 percent of the amount over $12,300

Compare With Previous Years' Rates

The difference between 2014 and 2015 tax brackets was marginal, just a few hundred dollars between income limits.

The same tax rates applied. The 39.6-percent bracket provided for under the terms of the American Taxpayer Relief Act was also in place in 2014.

If taxable income was:             The tax rate was:

$0 to $2,500                               15 percent of taxable income

$2,501 to $5,800                        $375 plus 25 percent of the amount over $2,500

$5,801 to $8,900                        $1,200 plus 28 percent of the amount over $5,800

$8,901 to $12,150                      $2,068 plus 33 percent of the amount over $8,900

$12,151 or more                        $3,140.50 plus 39.6 percent of the amount over $12,500

Compare this to 2013, which also included the 39.6-percent bracket. 

If taxable income was:             The tax rate was:

$0 to $2,450                               15 percent of taxable income

$2,451 to $5,700                        $367.50 plus 25 percent of the amount over $2,450

$5,701 to $8,750                        $1,180 plus 28 percent of the amount over $5,700

$8,751 to $11,950                      $2,034 plus 33 percent of the amount over $8,750

$11,951 or more                        $3,090 plus 39.6 percent of the amount over $11,950 

Income Taxes Aren't Estate Taxes

These tax rates and brackets should not be confused with estate tax thresholds and exemptions. They apply only to income earned by trusts or estates before they settle, such as rentals and interest or dividends generated by investments.

The estate tax applies to the overall value of the estate and requires filing IRS Form 706, the U.S. Estate (and Generation-Skipping Transfer) Tax Return. As of 2015, only estates valued at more than $5.43 million were subject to this tax, up from $5.25 million in 2013 and $5.34 million in 2014. The IRS publishes instructions for Form 706, revised and updated as of August 2015. 

NOTE: Tax brackets and rates are current as of the 2015 tax year. Please consult with an accountant or an attorney for information regarding more recent years. The information contained in this article is not intended as tax advice and it is not a substitute for tax advice.

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