What is the tax rate for trusts?

In Tennessee, trusts are subject to the state’s Hall income tax. This is a flat tax rate of 6%, which applies to trustees’ management fees, fiduciary income, and certain trust incomes as well. As of 2021, the Hall tax is calculated on the total income of the trust, after subtracting any contributions, deductions, or exemptions that may apply. For certain trusts, like irrevocable trusts, the trustees’ management fees, income distributions, and gains are all subject to the same tax rate. Trusts that are classified as Tennessee-based trusts, meanwhile, may be eligible for a lower Hall income tax rate of 5%. This lower rate applies to the fiduciary income and gains of Tennessee-based trusts, but the trustees’ management fees are still subject to the 6% flat tax rate. In terms of other taxes that may apply to trusts in Tennessee, trusts are subject to the state’s estate tax. However, trusts with fewer than $2 million in assets are exempt from this tax. Additionally, trusts that meet certain requirements may be eligible for a sales and use tax exemption. Finally, certain types of trusts may also be eligible for certain deductions or credits on their income taxes. Overall, trusts in Tennessee are subject to a 6% Hall income tax rate, with Tennessee-based trusts being eligible for a lower 5% rate. Other taxes may apply depending on the specific circumstances of the trust, so it’s important to consult a financial advisor or tax professional for the most accurate information.

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