Trust and estate income tax rates 2027.

The 2027 brackets

Trusts and estates reach the top federal rate at very low income because their brackets are compressed. Revenue Procedure 2026-35 gives the ordinary rate schedule in Table 5 under section 1(j)(2)(E). The tax on each band is below, with the cumulative tax at the start of the band.

Capital gains rates

Long-term capital gains and qualified dividends of an estate or trust are taxed at 0 percent up to $3,400 of taxable income and 15 percent up to $16,750 for 2027 (2026: $3,300 and $16,250), and 20 percent above. The gains sit on top of ordinary income, so the calculator stacks them above the ordinary part. The 3.8 percent net investment income tax is separate and not included here.

Why trustees distribute income

A trust that passes income out to beneficiaries generally takes a deduction for it and the beneficiary reports the income at their own rates. Income the trust keeps hits the 37 percent bracket at $16,500, compared with a single individual who does not reach 37 percent until $661,375. That gap is why many trustees weigh distribution against retention each year. The rules on distributable net income are outside this page.

The disability trust deduction

For taxable years beginning in 2027 the deduction under section 642(b)(2)(C)(i) for a qualified disability trust is $5,450, up from $5,300 for 2026. It is a separate item from the brackets above and is not applied in the calculator.

What changed from 2026

The bands moved up slightly: the first band ends at $3,400 instead of $3,300, the second at $12,100 instead of $11,700 and the 35 percent band at $16,500 instead of $16,000. The top rate of 37 percent is unchanged and now starts at $16,500. Capital gains breakpoints rose from $3,300 and $16,250 to $3,400 and $16,750.

Worked example (2027)

A trust has $10,000 of ordinary taxable income and no gains. The tax is $340 on the first $3,400 plus 24 percent of $6,600, which is $1,584, for $1,924, an effective rate of 19.24 percent. A trust with $20,000 of taxable income all ordinary pays $3,968 plus 37 percent of $3,500, which is $1,295, for $5,263. A trust with $20,000 of taxable income of which $8,000 is long-term gains has $12,000 of ordinary income taxed at $2,404, and gains from $12,000 to $20,000: $4,750 at 15 percent and $3,250 at 20 percent is $1,362.50. The total is $3,766.50.

Method

The calculator taxes the ordinary part of taxable income on the Table 5 brackets. It then stacks long-term gains above that ordinary income and applies 0 percent up to $3,400, 15 percent up to $16,750 and 20 percent above. It does not model distribution deductions, the exemption for a trust or estate, the alternative minimum tax or the net investment income tax. Figures were read on November 9, 2026.

What this does not cover

• Distributable net income, the distribution deduction and beneficiary taxation.
• The personal exemption of an estate or trust and the qualified disability trust deduction.
• The net investment income tax and the alternative minimum tax.
• State fiduciary income tax.

Figures read from the sources below on November 9, 2026. Last updated November 9, 2026.

Sources

• IRS Revenue Procedure 2026-35, section 3.01 (Table 5, estates and trusts) (retrieved November 9, 2026); IRS Revenue Procedure 2026-35, section 3.03 (maximum capital gains rate) (retrieved November 9, 2026); IRS Revenue Procedure 2026-35, section 3.37 (special rules for credits and deductions) (retrieved November 9, 2026)
• IRS Revenue Procedure 2025-32, section 4.01, 4.03 and 4.35 (the 2026 amount) (retrieved November 9, 2026)
• 26 U.S.C. section 1 (tax imposed), text at Cornell Legal Information Institute (retrieved November 9, 2026)