Similar to an individual’s personal exemption, estates and trusts are allowed an exemption amount [IRC §642(b)]. The value of the exemption depends on the type of trust.
It is short-hand to say that a “simple trust” is allowed a $300 exemption; the 1041 instructions read:
Trusts required to distribute all income currently. A trust whose governing instrument requires that all income be distributed currently is allowed a $300 exemption, even if it distributed amounts other than income during the tax year.
In years when a simple trust makes a distribution out of principal, it is considered a complex trust but it still allowed a $300 exemption.
Estates and trusts are not allowed a standard deduction; instead they may only take a deduction for amounts actually paid.