What is the taxation of trust income?

Trust income is subject to taxation in California. Trusts are treated as separate taxpayers and must file their own tax returns with the California Franchise Tax Board. The income of a trust is subject to taxation in California if the trust is deemed to be a resident trust or if the trust has California source income. Income that is derived from California sources and is taxable to the trust is subject to the highest tax rate of 13.3%. This rate applies to all income, including capital gains, dividends, income earned from investments, and even rental income from California-based real estate. Non-resident trusts are subject to a 9.3% rate on California source income. Additionally, non-resident trusts are also required to pay a 1.5% surcharge on any interest and dividends earned on investments held in California. The taxation of trust income can be complicated, so it is important to seek the advice of a qualified tax professional. Taxpayers should also be sure to research any applicable tax laws and regulations to ensure their trust complies with California tax laws.

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What is the taxation of trust income?

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