Brackets · calculator
The kiddie tax on a child's investment income
Interest, dividends and gains in a child’s name stop being lightly taxed above a small threshold.
Kiddie tax on investment income
Tax on the child’s income
$927
- Tax-free$1,350
- At the child's 10%$1,350
- At the parents' rate$3,300
Children under 19, or full-time students under 24, with unearned income only. Qualified dividends and gains would keep their lower rates.
The kiddie tax stops parents from moving investments into a child's name to use the child's low brackets. For 2026, a child's first $1,350 of unearned income (interest, dividends, capital gains, taxable scholarships beyond earned income rules) is covered by the dependent standard deduction, the next $1,350 is taxed at the child's own rate, and everything above $2,700 is taxed at the parents' marginal rate, under section 1(g) with the $1,350 figure of Rev. Proc. 2025-32 section 4.02, the same as in 2025. A child with $6,000 of dividends and parents in the 24% bracket owes about $927: nothing on the first $1,350, 10% on the next $1,350, 24% on the remaining $3,300. The rule applies to children under 19 at the end of the year, and to full-time students under 24, whose earned income does not cover more than half their support. Parents may report the child's income on their own return with Form 8814 when it is between $1,350 and $13,500.
Checked by Radif Partners · Editorial policy · How we calculate
Three layers of a child's investment income
| Child's unearned income | Tax-free | At the child's 10% | At parents' 24% | Tax |
|---|---|---|---|---|
| $1,000 | $1,000 | $0 | $0 | $0 |
| $2,700 | $1,350 | $1,350 | $0 | $135 |
| $4,000 | $1,350 | $1,350 | $1,300 | $447 |
| $6,000 | $1,350 | $1,350 | $3,300 | $927 |
| $10,000 | $1,350 | $1,350 | $7,300 | $1,887 |
| $20,000 | $1,350 | $1,350 | $17,300 | $4,287 |
Qualified dividends and long-term gains keep their preferential rates inside the kiddie tax: the parents' rate here means the rate that would apply on the parents' return, including the 0%, 15% or 20% of the capital gains bands when relevant. The calculator applies an ordinary rate to the whole excess, which overstates the tax on qualified dividends.
What escapes the kiddie tax
Earned income: wages from a summer job, self-employment income from mowing lawns or babysitting. That income gets the regular dependent standard deduction, the larger of $1,350 or earned income plus $450, and the child's own brackets; see the standard deduction page. Income inside a 529 plan or a Roth IRA is not taxed while it stays in the account. Trump accounts created by the 2025 law for children born from 2025 through 2028 also grow tax-deferred.
Filing for the child
A child with more than $1,350 of unearned income generally files a return, attaching Form 8615 to compute the tax at the parents' rate, which requires the parents' taxable income. When several children have kiddie-tax income, the parents' rate is computed on their combined net unearned income. Parents who prefer one return can use Form 8814 within its limits.
Gifts to children and the threshold
Parents and grandparents can give each child up to $19,000 in 2026 without a gift tax return, but income from gifted investments counts toward the kiddie tax. With a 4% yield, about $67,500 of savings in the child's name produces $2,700 of interest a year, the level where the parents' rate begins. Above that, custodial accounts lose most of their tax advantage.
Sources: IRS Rev. Proc. 2025-32: 2026 inflation-adjusted items and 2025 items modified by Public Law 119-21 (October 9, 2025); IRS Rev. Proc. 2024-40: 2025 inflation-adjusted items, read on October 11, 2026.