What the kiddie tax actually costs.
Plug in a child's full-year unearned income, their marginal rate, and the parents' marginal rate. The estimator returns the dollar tax split across the three 2026 IRS bands. Education only.
- This estimator and the companion lesson have not yet been reviewed by a CFP or CPA. The 2026 bands and the band math are sourced to IRS Revenue Procedure 2025-32 Section 4.02 and the Form 8615 instructions. Consult a licensed advisor before acting on a specific filing situation.
Interest, dividends, and realized capital gains for the year
Applies to the middle band; usually 10% for children with little other income
Applies to unearned income above the 2026 $2,700 threshold
Federal estimate only. State income tax on a child's investment income varies and is not included. Real Form 8615 calculations distinguish qualified dividends and long-term capital gains (taxed at preferential rates), which this estimator simplifies. For an actual filing, use IRS Form 8615 or a CPA.
On $4,000 of unearned income, an effective federal rate of 11.2%.
| Band | Income in band | Rate | Tax |
|---|---|---|---|
| 0 to $1,350 (standard deduction) | $1,350 | 0.0% | $0 |
| $1,350 to $2,700 (child's rate) | $1,350 | 10.0% | $135 |
| Above $2,700 (parents' rate, Form 8615) | $1,300 | 24.0% | $312 |
| Total | $4,000 | 11.2% | $447 |
Split the child's unearned income into the three 2026 bands.
Standard-deduction band $1,350 | Child's-rate band $1,350 | Parents'-rate band $1,300
2026 thresholds ($1,350 floor, $2,700 parents'-rate threshold) from lib/referenceData2026.ts (IRS Rev. Proc. 2025-32 Sec. 4.02).
Apply each band's rate. The standard-deduction band is offset by the child's standard deduction (0% federal).
0 + ($1,350 * 10.0%) + ($1,300 * 24.0%) = $447
The effective rate is total estimated tax over total unearned income.
$447 / $4,000 = 11.2%
Federal estimate only. State tax and the qualified-vs-ordinary distinction for dividends and capital gains are not modeled.
Assumptions
- The 2026 thresholds ($1,350 and $2,700) come from IRS Revenue Procedure 2025-32 Section 4.02 and are pulled from lib/referenceData2026.ts at render time.
- The middle band is taxed at the child's marginal ordinary-income rate (default 10%, configurable).
- The top band is taxed at the parents' marginal rate (configurable).
- All unearned income is treated as ordinary; preferential rates on qualified dividends and long-term capital gains are not applied.
- The child is assumed to meet the kiddie-tax age and support tests; the estimator does not evaluate eligibility.
Limitations
- No state income tax. State treatment of a child's investment income varies and is not modeled.
- No qualified-vs-ordinary distinction for dividends or capital gains. In reality the top band may apply a preferential rate to qualified income, which would lower the estimated tax.
- No Form 8814 election (where the parents report the child's interest and dividend income on their own return). The election has limits and is not always advantageous.
- No deduction for the child's investment expenses or other below-the-line items.
- The estimator does not check whether the kiddie tax applies to the specific child (age, full-time student status, earned-income-to-support test).
- It is not a tax return. It does not file Form 8615 or any other IRS form.
- It is not personalized tax advice. The right form, election, and rate depend on the household's specific income mix; a CPA earns their fee on this.
- It is not a state-tax estimate. Many states tax a child's unearned income separately, sometimes at a different rate.
- It is not a recommendation to use or avoid a UTMA, UGMA, or any other investment vehicle.
Common questions.
What are the 2026 kiddie tax thresholds?
Per IRS Revenue Procedure 2025-32 Section 4.02: the first $1,350 of a child's unearned income is offset by the standard deduction (0% federal tax). The next $1,350 (income from $1,350 to $2,700) is taxed at the child's marginal rate. Unearned income above $2,700 is taxed at the parents' marginal rate, reported on IRS Form 8615.
Does this estimator file my taxes?
No. It is an educational estimate of federal tax only. It does not file Form 8615, does not distinguish qualified versus ordinary dividends, does not include state income tax, and does not handle the Form 8814 parents' election. For an actual filing, use the IRS forms or a CPA.
What counts as a child's unearned income?
Interest, dividends, and realized capital gains. Wages from a job (earned income) are not subject to the kiddie tax and are taxed at the child's normal rate.
Educational estimate only. This estimator computes a federal-only figure across the three 2026 IRS kiddie-tax bands and does not file any IRS form, model state tax, apply preferential rates to qualified dividends or long-term capital gains, or evaluate the Form 8814 election. Always verify with a CPA or the IRS instructions before acting on a specific filing situation. ClearMoneySchool does not provide personalized financial or tax advice.