The kiddie tax in 2026: when a child's investment income is taxed at your rate

Sooner or later most parents have the thought: my child is in the lowest bracket, so if the investments were in her name, the dividends would barely be taxed. Congress had the same thought a long time ago and closed the door. The kiddie tax taxes most of a child's investment income at the parent's rate. This page covers which children it reaches, how a child's unearned income is sliced into three parts, the two forms that report it, and an example.

What counts as unearned income

Unearned income is income that isn't pay for work: interest, dividends, capital gains, and also things like taxable scholarship amounts and certain trust distributions. Wages from a summer job are earned income, and the kiddie tax doesn't touch them. ³

Which children it reaches

The kiddie tax applies to a child who is: ¹

• under 18 at the end of the year, or
• 18 at the end of the year, with earned income that was not more than half of the child's own support, or
• a full-time student over 18 and under 24 at the end of the year, with earned income that was not more than half of the child's support.

Two more conditions: at least one parent is alive at year end, and the child isn't filing a joint return. ² A full-time college student, age 20, living on family support and a brokerage account is squarely inside it. A student of the same age who supports herself with a full-time job is not.

Three slices of unearned income

Picture the child's unearned income as three slices, taken in order. ^{2 1}

1. The first slice is tax-free. For 2026, a dependent child's standard deduction is at least $1,350 (or earned income plus $450, if that is larger, up to the normal standard deduction). For a child with only investment income, that floor covers the first $1,350.
2. The second slice is taxed at the child's own rate. The next $1,350 is taxed like anyone else's income, usually at the bottom rate of 10%.
3. Everything above that is taxed at the parent's rate. The tax on this slice is figured as if it were added to the parent's taxable income. ²

So the kiddie tax starts only when unearned income is more than the first two slices together. The IRS states that combined threshold in dollars on its Topic 553 page. ¹

A child who owes the kiddie tax may also owe the 3.8% net investment income tax, figured on Form 8960, if the child's own income is high enough. ¹

Two ways to report it

Form 8615, on the child's return

The usual way. The child files a return and attaches Form 8615, which pulls in the parent's taxable income and rate to figure the tax on the third slice. ¹ It needs the parent's return numbers, so the parent's return usually has to be done first, or at least far enough along.

Form 8814, on the parent's return

If the conditions are met, a parent can skip the child's return entirely and report the child's income on the parent's own return with Form 8814. ⁴ The main conditions: the child meets the age test, has only interest and dividends (including capital gain distributions), has gross income of less than $13,500, made no estimated payments, and had no backup withholding. ¹

It saves a return, but it isn't always cheaper. The form itself carries a caution: the tax on the child's income may be less on a separate return for the child, because the parent can't take certain tax benefits the child could. ⁵ The child's income also raises the parent's adjusted gross income, which can shrink credits and deductions that phase out with income. It is worth running both ways in software before choosing.

What to gather

• The child's Forms 1099-DIV, 1099-INT and 1099-B.
• The child's earned income, and for a child aged 18 to 23, a rough support budget.
• The parents' taxable income and filing status for the year (Form 8615 needs it).
• For divorced or separated parents, which parent's return the rules point to.