02/12/2026
For the 2025 tax year, the "kiddie tax" applies to unearned income over $2,700 for children under age 18 (and certain older students). The first $1,350 of unearned income is tax-free, and the next $1,350 is taxed at the child's rate, with amounts exceeding $2,700 taxed at the parent's marginal rate. If unearned income is less than $13,500, parents may be able to report the income on their own return using Form 8814.
Know the difference: Earned income is any income from a job including tips and commissions while unearned income can come from investments or interest.
Unearned income is not subject to payroll taxes, but it is still taxable—and can affect credits or trigger things like the Kiddie Tax. If your child received a 1099-INT or 1099-DIV, always share it with your tax preparer—even if the amount seems small.
Our gift to you: If your child is required to file taxes this year we will prepare the return for your dependents basic return for free with your return!