Kiddie Tax Calculator 2026
Estimate the kiddie tax on your child's unearned income for 2026 using the IRS Form 8615 method: the first $1,350 is tax-free, the next $1,350 is taxed at the child's rate, and the rest at the parent's rate. Enter age, income and the parent's taxable income. Free, private — runs in your browser.
What Is the Kiddie Tax?
The kiddie tax is a federal rule (IRC §1(g), figured on IRS Form 8615) that taxes a child's unearned income above a yearly threshold at the parent's tax rate. For 2026, the first $1,350 of a child's investment income is tax-free, the next $1,350 is taxed at the child's own rate, and anything over $2,700 is taxed at the parent's rate if that is higher.
It exists to stop families from moving dividends, interest and capital gains into a child's name to use the child's low bracket. It covers interest, dividends, capital gains, rents, royalties and taxable trust distributions; wages and self-employment income are never part of it. Sources: IRS Topic 553, Instructions for Form 8615, Rev. Proc. 2025-32 (2026 amounts).
Kiddie Tax 2026 Thresholds and Worked Example
Rev. Proc. 2025-32 keeps the 2026 kiddie tax threshold at the same level as 2025: a $1,350 tax-free slice and a $2,700 trigger point. Here is how a child with $5,000 of interest and dividends is taxed in 2026 when the parents file jointly with $150,000 of taxable income (their 22% bracket, per the IRS 2026 bracket release):
| Slice of unearned income | Amount | Rate | Tax |
|---|---|---|---|
| First $1,350 (dependent standard deduction) | $1,350 | 0% | $0 |
| Next $1,350 (child's own rate) | $1,350 | 10% | $135 |
| Above $2,700 (parent's rate) | $2,300 | 22% | $506 |
| Total kiddie tax | $5,000 | 12.8% effective | $641 |
Without the kiddie tax, the child's $3,650 of taxable income would cost only $365 at 10%, so the rule adds $276 in this case. If the parents were in the 32% bracket, the top slice alone would cost $736. Qualified dividends and long-term gains in that slice use the parent's capital-gains rates on the real form, so this calculator (which uses ordinary rates) shows an upper estimate for those.
Who Is Subject to the Kiddie Tax?
According to IRS Topic 553 and the Form 8615 instructions, a child's return must use Form 8615 when all of these are true:
- The child's unearned income is more than $2,700.
- The child meets the age test: under 18 at the end of the year; or exactly 18 and their earned income was not more than half of their own support; or a full-time student aged 19 to 23 whose earned income was not more than half of their support.
- The child is required to file a tax return.
- At least one parent is alive at the end of the year.
- The child does not file a joint return.
A 19-year-old who is not a full-time student, or anyone 24 or older, is outside the kiddie tax entirely and pays tax at their own rates.
Form 8615 vs Form 8814
Families have two ways to report the kiddie tax. Form 8615 is filed with the child's return; Form 8814 is an election to report the child's income on the parent's return instead (Instructions for Form 8814).
| Form 8615 | Form 8814 | |
|---|---|---|
| Filed with | Child's own Form 1040 | Parent's Form 1040 |
| Income types allowed | Any unearned income, plus earned income on the same return | Only interest and dividends (incl. capital gain distributions, Alaska PFD) |
| 2026 income limit | None | Child's gross income over $1,350 and under $13,500 |
| Other conditions | Child meets the age test and must file | No estimated payments or backup withholding in the child's name; same age test |
| Main trade-off | Separate return, but often lower total tax | One return, but can raise the parent's AGI and total tax |
How This Kiddie Tax Calculator Works
Since the SECURE Act, the kiddie tax uses the parent's rate, not the compressed trust and estate brackets that applied in 2018 and 2019. This calculator follows the Form 8615 approach: it subtracts the $2,700 threshold to find net unearned income, then measures how much the parent's 2026 tax would rise if that amount were added to the parent's taxable income, using the 2026 brackets for the parent's filing status. It adds 10% on the child's $1,350 middle slice and compares the result with the tax at the child's own rates, keeping the larger figure, as the form does. It does not handle siblings sharing one parent's return, the parent's capital-gains rates, or state tax.
Strategies to Minimize Kiddie Tax Impact
Parents can reduce kiddie tax exposure by investing in tax-efficient assets within custodial accounts — growth stocks that defer capital gains, municipal bonds whose interest is federally tax-exempt, or Series I/EE savings bonds where interest can be deferred until maturity. Contributing to a 529 plan instead of a UGMA/UTMA account avoids kiddie tax entirely since 529 withdrawals for qualified education expenses are tax-free. Timing asset sales to years when the child has lower unearned income, or waiting until the child ages out of kiddie tax eligibility, can also help. For families with significant investment portfolios earmarked for children, consulting a tax advisor about the interplay between kiddie tax, the Net Investment Income Tax (NIIT), and state taxes is recommended.
Last updated: October 2026
Frequently Asked Questions
What is the kiddie tax threshold for 2026?
For 2026, the kiddie tax applies to a child's unearned income above $2,700 (Rev. Proc. 2025-32). The first $1,350 is tax-free, the next $1,350 is taxed at the child's own rate, and the amount above $2,700 is taxed at the parent's rate if that is higher.
At what age does the kiddie tax stop applying?
It can apply through the year a child turns 18, unless an 18-year-old's earned income covered more than half of their own support. Full-time students aged 19 to 23 are also covered under the same support test. A child who is 19 and not a full-time student, or anyone 24 or older, pays tax at their own rates.
Does the kiddie tax use the parent's rate or trust rates?
The parent's rate. Trust and estate brackets applied only for 2018 and 2019; the SECURE Act restored the parent's-rate method, and the 2025 Form 8615 instructions and IRS Topic 553 describe unearned income over the threshold as taxed at the parent's rate if it is higher than the child's.
What counts as unearned income for the kiddie tax?
Unearned income includes dividends, interest, capital gains, rental income, royalties, trust distributions, and annuities. Wages, salaries, and self-employment income are earned income and are not subject to the kiddie tax.
Do I need to file Form 8615 for the kiddie tax?
Yes. If your child owes kiddie tax (unearned income above $2,700 and the child meets the age requirements), Form 8615 must be attached to the child's tax return. Alternatively, parents can elect to include the child's income on their own return using Form 8814 if the child's only income is interest and dividends and the child's gross income for 2026 is more than $1,350 but less than $13,500.
Can I avoid the kiddie tax with a 529 plan?
Yes. Qualified 529 plan withdrawals used for education expenses are tax-free and not subject to the kiddie tax. Moving investments from a UGMA/UTMA custodial account to a 529 plan (where allowed) can eliminate kiddie tax on future earnings.
Does the kiddie tax apply to earned income from a job?
No. Earned income such as wages or self-employment income is always taxed at the child's own rates. The kiddie tax only applies to unearned (investment) income above the threshold.
Who is subject to the kiddie tax?
A child is subject to the kiddie tax when their unearned income is over $2,700, they must file a return, at least one parent is alive at year end, they do not file a joint return, and they are under 18, or 18 or a full-time student aged 19 to 23 whose earned income did not cover more than half of their support.
Did the kiddie tax threshold change from 2025 to 2026?
No. Rev. Proc. 2025-32 sets the 2026 amount at $1,350, the same as 2025, so the kiddie tax threshold stays at $2,700 and the Form 8814 gross income limit stays at $13,500. What did change is the parent's 2026 tax brackets, which set the rate on income above the threshold.