Kiddie Tax Calculator (2026)
Gifting investments to your kids can backfire: unearned income above $2,700 in 2026 is taxed at YOUR rate. See exactly where the tax kicks in.
How to use this calculator
- Enter child's unearned income (interest, dividends, gains).
- Enter your (parent's) marginal tax rate.
- Your results appear instantly below and update as you change the numbers.
How this calculator works
A dependent child's unearned income in 2026: the first $1,350 is tax-free (the dependent standard deduction), the next $1,350 is taxed at the child's own rate (typically 10%), and everything above $2,700 is taxed at the parent's marginal rate via Form 8615. Worked example: $5,000 of dividends at a 24% parent rate — $1,350 free, $1,350 at 10% ($135), and $2,300 at 24% ($552), for $687 of tax.
Frequently asked questions
Who does the kiddie tax apply to?
Children under 18, and full-time students ages 18–23 who are not self-supporting. The point is to stop parents from shifting investment income to a child's lower bracket — above $2,700 of unearned income, the strategy no longer saves any tax.
Does it apply to earned income like a summer job?
No — wages and self-employment income are taxed at the child's own rates with the child's own standard deduction (which grows with earned income). Only unearned income triggers the kiddie tax. A teen's $6,000 summer job pays little or no tax; $6,000 of dividends gets hit at your rate.
How can families avoid it?
Keep a child's unearned income at or below $2,700, or use accounts that defer or avoid the income: custodial Roth IRAs (earned-income funded), 529 plans, or UGMA/UTMA assets invested for growth and sold after the kiddie-tax years. Timing capital gains in the child's name before age 18 is generally the wrong move.
What rate does 'the parent's rate' mean exactly?
It is the parent's marginal rate on their own taxable income — not a fixed number — computed on Form 8615. If the parents file jointly, it is the couple's top marginal rate; the tool asks for that rate directly so you can plug in your own.
Disclaimer: Results are estimates for general information only and do not constitute financial, tax, or legal advice. Figures reflect 2026 rules and may change. Always confirm current limits and consult a qualified professional before making decisions. Official figures: IRS.gov · 2026 limits per IRS tax inflation adjustments.