Wisconsin trust tax rates run on four graduated brackets, from 3.50 percent on the first $14,680 of taxable income up to 7.65 percent on income above $323,290. The rates apply only to income the trust retains for the year. Anything distributed to beneficiaries is deducted from the trust’s income and taxed on their personal returns instead.
The Four Wisconsin Fiduciary Brackets
Wisconsin Statutes Section 71.06(1r) sets the fiduciary rates for taxable years beginning after December 31, 2024. Every trust and estate uses the same schedule, with one exception noted below:
- $0 to $14,680: 3.50 percent
- $14,681 to $50,480: 4.40 percent
- $50,481 to $323,290: 5.30 percent
- Over $323,290: 7.65 percent
The brackets are marginal. Each rate applies only to the slice of income inside its range, not to the whole return. A trust with $60,000 of Wisconsin taxable income pays 3.50 percent on the first $14,680, 4.40 percent on the next $35,800, and 5.30 percent on the remaining $9,520. The blended effective rate on that $60,000 works out to roughly 4.09 percent.1Wisconsin State Legislature. Wisconsin Statutes 71.06 – Rates of Taxation
These are the same bracket thresholds Wisconsin uses for single individuals. The difference is that trusts tend to accumulate income in a narrower range than a working person’s wages, so a moderately productive trust can push into the 5.30 percent bracket on relatively modest earnings and reach the top 7.65 percent bracket if the account is large.
Electing Small Business Trusts
An electing small business trust (ESBT) does not get the benefit of the graduated schedule. Wisconsin taxes ESBT income at a flat 7.65 percent on every dollar, regardless of amount.2Wisconsin State Legislature. Wisconsin Statutes 71.125 – Imposition of Tax
Federal Rates Stack on Top
Wisconsin’s rate is only part of the bill. The IRS taxes trust and estate income on its own schedule, and the federal brackets are far more compressed. For 2026 the federal rates are:
- $0 to $3,300: 10 percent
- $3,301 to $11,700: 24 percent
- $11,701 to $16,000: 35 percent
- Over $16,000: 37 percent
A trust reaches the top federal rate at just $16,000 of taxable income. A Wisconsin trust that keeps $50,000 of income for the year faces the federal graduated rates plus the Wisconsin graduated rates, and the combined effective rate on income above $16,000 can run past 40 percent.3Internal Revenue Service. 2026 Form 1041-ES Estimated Income Tax for Estates and Trusts
Distributions Change the Rate the Trust Pays
The brackets apply to the trust’s taxable income after the distribution deduction. Income distributed to beneficiaries during the year comes off the trust’s income and lands on the beneficiaries’ personal returns through Schedule 2K-1. Only what the trust retains runs through the fiduciary schedule.4Wisconsin Department of Revenue. 2025 Instructions for the Wisconsin Fiduciary Return Form 2 and Schedule 2K-1
This is the largest lever available for cutting the combined rate. A trust sitting in the 37 percent federal bracket that distributes income to a beneficiary in the 12 percent bracket saves 25 cents on every dollar federally, before counting any Wisconsin savings from moving income out of the trust’s 5.30 or 7.65 percent bracket into a beneficiary’s lower one.
Wisconsin Modifications
Wisconsin taxable income starts from the federal figure and then adjusts. Interest from municipal bonds issued by other states gets added back because Wisconsin does not exempt it. Interest from Wisconsin municipal bonds gets subtracted because Wisconsin does exempt its own. Depreciation differences between federal and state rules may require reconciliation as well. The adjusted figure, minus the distribution deduction, is what the brackets apply to.4Wisconsin Department of Revenue. 2025 Instructions for the Wisconsin Fiduciary Return Form 2 and Schedule 2K-1
Who Pays Wisconsin Rates on Everything, and Who Only on Wisconsin Income
The brackets above apply to all of a trust’s taxable income if the trust is a Wisconsin resident. A nonresident trust pays Wisconsin tax only on income from Wisconsin sources, which generally means income from real property in the state or from a business operating in the state.5Department of Revenue. Estates, Trusts, and Fiduciaries
Residency hinges on the person who created the trust, not on where the trustee lives or where assets are held. Wisconsin Statutes Section 71.14 sets out the rules.
A testamentary trust created through a will is a Wisconsin resident if the decedent was domiciled in Wisconsin at the time of death. That classification holds until a court formally transfers jurisdiction to another state.6Wisconsin State Legislature. Wisconsin Code 71.14 – Situs of Income
For a lifetime (inter vivos) trust that became irrevocable on or after October 29, 1999, Wisconsin claims the trust as a resident if the person who placed assets in it was a Wisconsin resident either when the assets were contributed (if the trust was already irrevocable at that point) or when the trust became irrevocable (if it was revocable when funded). Inter vivos trusts that became irrevocable before that date are generally residents of the state where they are administered.6Wisconsin State Legislature. Wisconsin Code 71.14 – Situs of Income
Grantor Trusts Owe Nothing at the Trust Level
If the whole trust is a grantor trust, meaning the person who created it retains enough control that the IRS treats the income as the grantor’s, the trust does not file Wisconsin Form 2 and the fiduciary rates do not apply. The grantor reports the income on a personal Wisconsin return at individual rates instead. The one exception is a grantor trust that files under its own employer identification number rather than the grantor’s Social Security number, including a qualified subchapter S trust; that trust must file Form 2 with a complete copy of the federal return attached.7Wisconsin Department of Revenue. Instructions for the Wisconsin Fiduciary Return Form 2 and Schedule 2K-1
Credit for Taxes Paid to Another State
A Wisconsin resident trust that earns income in another state and pays income tax there can claim a credit against its Wisconsin tax, so the same dollar is not taxed twice. The credit cannot exceed the Wisconsin tax attributable to that income, and the income has to qualify as taxable under Wisconsin’s own sourcing rules for the credit to apply. The credit offsets the Wisconsin bill rather than eliminating it.8Wisconsin State Legislature. Wisconsin Statutes 71.07(7)(b) – Credits
For a multistate trust, the practical effect is that the Wisconsin rate on out-of-state income drops by whatever was already paid elsewhere, up to the Wisconsin tax on that slice.