Updated July 28, 2026. Quick answer: They behave in opposite ways, in the same section. A trust’s threshold is not a fixed dollar amount at all — IRC §1411(a)(2)(B)(ii) ties it to the start of the top trust bracket, which is indexed, so it rises every year. The individual thresholds are fixed statutory amounts with no inflation adjustment anywhere in the statute, and have never moved since enactment.
Two provisions, opposite behaviour
| Trust or estate | Individual | |
|---|---|---|
| Threshold set by | §1411(a)(2)(B)(ii) — the top bracket start | §1411(b) — a fixed dollar amount |
| Indexed? | Yes, indirectly | No. Never |
| Effect over time | Keeps pace | Catches more people every year by inflation alone |
This is a genuine drafting asymmetry with real consequences in both directions. The individual threshold is a fiscal-drag story — an unindexed figure that reaches further down the income scale every year. The trust threshold does not drift that way, but it starts so low that a trust hits it almost immediately anyway.
The exemption most trustees can actually use
A trust’s NIIT base is limited to undistributed net investment income. §1411(a)(2) applies the tax to the lesser of undistributed net investment income or the excess over the threshold. So a timely distribution of investment income can take it out of the trust’s NIIT base entirely — and the beneficiary may be well below their own unindexed threshold, in which case the 3.8% disappears rather than moving.
That is one more reason the distribution decision matters, alongside the bracket compression. Both point the same way, and both are bounded by what distributable net income allows.
No dollar amounts appear on this page. The trust rate brackets are adjusted annually, and the trust threshold for the net investment income tax is not a fixed figure at all — IRC §1411(a)(2)(B)(ii) ties it to the start of the top trust bracket, so it moves every year. Take current figures from the IRS revenue procedure for the year in question.
Sources
IRC §1(e) and §1(j) (as made permanent by P.L. 119-21); §641; §643(a); §644; §651 and §661 (distribution deduction); §663(b) and Treas. Reg. §1.663(b)-2; §671 and §673–677 (grantor trust rules); §675(4)(C) (substitution power); §1411(a)(2) and (b) (net investment income tax); Rev. Rul. 2008-22. North Carolina Dept. of Revenue v. Kaestner Family Trust, 588 U.S. 262 (2019). All read July 2026.
This states what the cited authority says. It is not tax advice, and retirement-plan design turns on facts about your business and your other entities that no page can see. Every dollar limit referenced here is indexed and changes annually.