Trusts pay taxes on income like individual taxpayers, whether this consists of investment income such as dividends, interest, and capital gains, or business income, such as rental income on real estate owned by the trust.
However, there are two major differences. The first is that the tax rates for trusts are significantly compressed for trusts as compared to those for individuals. For instance, the top rate of 37 percent kicks in at $626,350 of income for individuals ($751,600 for married couples filing jointly) and at around $15,000 to $16,000 for trusts.