Updated October 5, 2026. Quick answer: Yes. Massachusetts taxes income received by trustees, which “shall be subject to the taxes imposed by this chapter” to the extent the persons it is payable to, or accumulated for, are Massachusetts inhabitants; but income that would be subject to tax under section 5A if a nonresident received it is taxable regardless of whether those persons are residents or nonresidents.
How Massachusetts treats trust income
| Item | What the documents say |
|---|---|
| Treatment | Massachusetts taxes trust income under the same chapter as individual income, based on who the beneficiaries are and who created the trust. |
| Who counts as a resident trust | A trust created by a person who was a Massachusetts inhabitant at creation or at any time in the income year, or who died one, is covered if at least one trustee is an inhabitant. The statute says the trust is covered where “any one of whom was an inhabitant of the commonwealth” at the time of creation and a trustee also lives in the state; income accumulated for unborn or unascertained beneficiaries is taxed as if for a Massachusetts inhabitant. |
| Rate on trust income | The Massachusetts DOR rates page lists Fiduciary income at 5.00% for residents and nonresidents, with a 4% surtax on income over $1,083,150 for tax year 2025. |
| Distribution deduction | A fiduciary that passes income to a beneficiary under federal sections 652 or 662 is “allowed a deduction in computing the taxable income of the trust” for that income, and the beneficiary includes it in gross income. |
| Nonresident trusts | A trust outside the resident test is taxed only on income that “subject to taxation under section five A if received by a nonresident” and at the same rate and in the same manner as section five A. |
| Return to file | The statute says a trustee or fiduciary “shall file with his return of income a form” showing the income attributable to each beneficiary. |
A $10,000 example
A trust with $10,000 of taxable income that it keeps, rather than distributes, is taxed at 5.00%, computed as $10,000 x 5.00% = $500, 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
For tax year 2026 the DOR rates page prints the 4% surtax threshold as $1,107,750.
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 Massachusetts taxes retirement income, whether Massachusetts taxes pensions, what a living trust costs in Massachusetts, trust income tax by state, and federal trust tax brackets.
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Answer againSources
- M.G.L. c. 62, section 10: Income from trust estates; deductions (Massachusetts Legislature): https://malegislature.gov/Laws/GeneralLaws/PartI/TitleIX/Chapter62/Section10
- M.G.L. c. 62, section 4: Rates of tax (Massachusetts Legislature): https://malegislature.gov/Laws/GeneralLaws/PartI/TitleIX/Chapter62/Section4
- Tax Rates (Massachusetts Department of Revenue, mass.gov): https://www.mass.gov/info-details/massachusetts-tax-rates
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.