Income tax while you are alive
You report a revocable trust's income on your own return.
Section 676 treats the grantor as the owner when the grantor can revest title. The Instructions for Form 1041 say a revocable living trust is a grantor trust because it is revocable, and that Optional Method 1 lets the trustee give payers the grantor's name and taxpayer identification number instead of filing Form 1041. The Instructions for Form SS-4 say that trustee does not need an employer identification number for the trust while Optional Method 1 continues.
Federal estate tax
For deaths in 2026 the basic exclusion amount is $15,000,000, and a revocable trust does not take its assets out of the gross estate.
The IRS 2026 inflation adjustments state that basic exclusion amount for estates of decedents who die during 2026. The IRS estate tax page uses the same $15,000,000 as the 2026 filing threshold, and it says a surviving spouse's election to use a deceased spouse's unused exemption is made on a timely filed estate tax return. Section 2038 includes property you transferred if, at death, you still hold a power to alter, amend, revoke, or terminate who enjoys it. A life policy you own can be included under section 2042. An irrevocable life insurance trust is counsel work, not the $349 packet.
Basis at death
Property acquired from a decedent takes a basis of fair market value at the date of death, unless section 1014 names a different amount.
Section 1014(a) states that rule. An election under section 2032 uses the alternate valuation date in that section. Section 1014(b)(2) includes property transferred in trust when the decedent kept the right to revoke.
State estate tax
State estate tax is separate from the federal exclusion. Open the state page for the revenue or statute link.
| State | State estate tax |
|---|---|
| Illinois, New York, Massachusetts, Washington | Yes. See the state page. |
| Indiana, Ohio, Texas | None on the linked state page. |
| Michigan | Tied to a federal credit. See the state page. |
| Florida | None on the linked state page. |
| California | See the California page. |
| Other states | See the state page. |
The state pages state the probate path, the fee rule, the small-estate figure, any estate or inheritance tax, and how spouses hold property, each point linked to a statute or a court site.
When tax planning matters
At a net worth of $5M or more, with a large life policy or a business that may grow, use the counsel desk.
See how those types rank on the best trust types for families shortlist.