Updated October 5, 2026. Quick answer: Yes. Pennsylvania taxes trust income at 3.07%, and the Department of Revenue says the “single controlling factor in determining if a trust is a resident trust” is whether the person who created the trust or transferred property to it was a Pennsylvania resident.
How Pennsylvania treats trust income
| Item | What the documents say |
|---|---|
| Treatment | Pennsylvania taxes irrevocable trusts as separate taxpayers on income in its eight classes that is not distributed to beneficiaries. The source says: “Estates and trusts are taxpayers for Pennsylvania personal income tax purposes.” |
| Who counts as a resident trust | Under the statute, a resident trust is “Any trust created by, or consisting in whole or in part” of property transferred to a trust by a person who was a Pennsylvania resident at the time of the creation or transfer. The residences of the trustee and the beneficiaries do not matter. |
| Rate on trust income | The statute states the rate in words, as “at the rate of three and seven hundredths per cent” which the Department of Revenue rate table prints as 3.07%. It is the same rate individuals pay. |
| Distribution deduction | A trust may deduct income it must distribute, or actually pays or credits, to a beneficiary, and the beneficiary reports that income instead. The source says: “any distribution of income that they are required to distribute”. |
| Eight income classes, no netting | A trust cannot offset income in one Pennsylvania income class with a loss in another class, and it cannot carry income or loss to other years. |
| Nonresident trusts | A nonresident trust is taxed only on income in the eight classes “received from sources within this Commonwealth” in the same manner as a nonresident individual. |
| Grantor and revocable trusts | If a trust is revocable, “the settlor is deemed the recipient of the income or gains” and reports it on his or her own individual return. |
| Return to file | A trustee of a taxable trust files Form PA-41 with a copy of federal Form 1041. The source says: “a trustee must file a PA-41 Fiduciary Income Tax Return” for a resident trust that received taxable income or incurred a loss. |
A $10,000 example
A trust with $10,000 of taxable income that it keeps, rather than distributes, is taxed at 3.07%, computed as $10,000 x 3.07% = $307, before any deduction or exemption the state allows. Federal tax on the trust’s income still applies.
Income the trust passes out to a beneficiary is handled as the distribution deduction row above describes.
What changes in 2026
The latest documents read print no 2026 change to how trust income is taxed.
Federal rules
The state’s treatment sits on top of the federal one. The federal brackets a trust faces are laid out in trust tax brackets versus individual brackets, and capital gains that a trust keeps are covered in capital gains stay in the trust. The IRS explains the federal return in the About Form 1041 page.
Related: how Pennsylvania taxes retirement income, whether Pennsylvania taxes pensions, what a living trust costs in Pennsylvania, trust income tax by state, and federal trust tax brackets.
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Answer againSources
- Personal Income Tax Guide: Estates, Trusts and Decedents (Pennsylvania Department of Revenue): https://www.pa.gov/agencies/revenue/forms-and-publications/pa-personal-income-tax-guide/estates,-trusts-and-decedents
- Personal Income Tax Rates (Pennsylvania Department of Revenue): https://www.pa.gov/agencies/revenue/resources/tax-rates/personal-income-tax-rates
- Tax Reform Code of 1971, Act 2 of 1971, Article III (Pennsylvania General Assembly): www.palegis.us
Sources: the primary documents linked above, read on October 5, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.