Kiddie Tax Calculator 2026
Calculate the kiddie tax on your child's unearned income — dividends, interest, and capital gains taxed at trust and estate rates under IRC §1(g). Enter your child's age, student status, and income to see whether the kiddie tax applies and how much is owed for 2026. Based on IRS Form 8615 rules. Free, private — runs entirely in your browser.
What Is the Kiddie Tax?
The kiddie tax is a federal tax rule under IRC §1(g) that taxes a child's unearned income above a threshold at higher rates instead of the child's own low bracket. Congress introduced it in 1986 to prevent parents from shifting investment income to children who would otherwise pay little or no tax. For 2026, the first $1,350 of unearned income is tax-free (covered by the standard deduction for dependents), and the next $1,350 is taxed at the child's own rate (typically 10%). Unearned income above $2,700 is taxed at trust and estate rates, which reach 37% at just $15,650 — far faster than individual brackets. The kiddie tax applies to dividends, interest, capital gains, rental income, and trust distributions. It does not apply to earned income such as wages. The IRS requires Form 8615 for affected children. Source: IRS Form 8615, Publication 929.
Who Does the Kiddie Tax Apply To?
The kiddie tax applies to children who meet all of these conditions: (1) the child has more than $2,700 in unearned income for 2026, (2) the child is required to file a tax return, (3) the child is under age 19 at the end of the tax year, OR under age 24 if a full-time student, and (4) the child does not file a joint return. Children who are age 19 or older (or 24+ for students) file taxes at their own rates regardless of income source. Additionally, the kiddie tax does not apply if neither parent is alive at the end of the year. If your child has only earned income from a job, the kiddie tax never applies — only unearned income triggers it. Understanding these thresholds is critical for families with custodial accounts (UGMA/UTMA), 529 distributions, or inherited investments.
How Kiddie Tax Is Calculated in 2026
Under the Tax Cuts and Jobs Act (TCJA), which the One Big Beautiful Bill Act (OBBB) extended, the kiddie tax uses trust and estate tax brackets rather than the parent's marginal rate. This simplifies filing because the parent's return is not needed. The 2026 trust and estate brackets are: 10% on the first $3,150, 24% on $3,151–$11,450, 35% on $11,451–$15,650, and 37% above $15,650. These brackets compress rapidly — a child with $20,000 in unearned income hits the 37% rate, whereas an individual filer would still be in the 12% bracket at that income level. This calculator applies the standard deduction for dependents ($1,350), taxes the next $1,350 at the child's 10% rate ($135), then applies trust and estate brackets to the excess. The result is the total kiddie tax liability and effective rate on unearned income. Last updated May 2026.
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.
Frequently Asked Questions
What is the kiddie tax threshold for 2026?
For 2026, the kiddie tax applies to unearned income above $2,700. The first $1,350 is tax-free, the next $1,350 is taxed at the child's rate (10%), and amounts above $2,700 are taxed at trust and estate rates under IRC §1(g).
At what age does the kiddie tax stop applying?
The kiddie tax stops applying when the child turns 19, or 24 if they are a full-time student. After that age, all income — earned and unearned — is taxed at the child's own individual rates.
Does the kiddie tax use the parent's rate or trust rates?
Under TCJA (extended by OBBB through 2026+), the kiddie tax uses trust and estate tax brackets, not the parent's marginal rate. Trust brackets reach 37% at just $15,650, making them steeper than individual brackets.
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 income is only from interest and dividends totaling less than $12,500.
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.