Income Tax Rates for Trusts

Trust income taxation: certain private and oral trusts face maximum marginal rate; public trusts may be taxed as AOPs.

Income of a trust is generally taxed like a resident individual, with Alternate Minimum Tax applied as specified. Specific rules impose the maximum marginal rate for private trusts carrying business income, private discretionary trusts with indeterminate beneficiary shares, and oral trusts; private trusts with ascertainable beneficiary shares are taxed in the beneficiaries' hands. Public trusts not exempt are taxed as an Association of Persons, and exemption forfeiture results in tax at the maximum marginal rate; surcharge and cesses apply similarly to individuals or AOPs.