Do Minors Pay Taxes on Income? What Parents Should Know

October 28, 2026 by Kate Ferreira

As kids start earning money from part-time jobs, investments, or other sources, parents likely start to wonder whether that income comes with a tax obligation. As with anything related to the IRS, the rules can be surprisingly nuanced, especially when a child is still claimed as a dependent.

In turn, the short answer to whether minors pay taxes on income is: sometimes.

Some parents assume that if their child is still listed as their dependent, they are exempt from tax filing rules. However, a child can be claimed as a dependent and still need to file a federal income tax return. Whether a child has to file usually depends on the type of income and how much they received. 

 

When a Child May Need to File an Income Tax Return

The IRS looks at a child’s income in two main categories: earned income and unearned income. 

• Earned income includes wages, salaries, and other pay for work performed.
• Unearned income generally includes interest, dividends, capital gains, rents, royalties, unemployment compensation, and certain taxable scholarship income not reported on Form W-2. 

The filing requirement depends on which type of income the child has and how much of it they received.

 

If Your Child Has Earned Income

If your child worked a summer job, had a part-time job during the school year, or earned money through other taxable work, they may need to file an income tax return if their earned income is high enough. 

• For 2025, if your child had only earned income over $15,750, they would have needed to file a return.  
• For 2026, if your child has only earned income over $16,100, they will need to file a return. 

If Your Child Has Self-Employment Income

If your child started their own business, they would be required to file a return if their net earnings from self-employment income are $400 or more. For more information about self-employment income earned by children, please review the IRS’s Tax Tip titled “When the lemonade stand makes bank: Young entrepreneurs and taxes.”   

 

If Your Child Has Unearned Income

Unearned income can trigger an income tax filing requirement, even when a child does not work. As mentioned above, this commonly comes up when a child has:
 

• Interest
• Dividends
• Capital gains
• Rent or royalty income (Sometimes children may have this type of income if they are a beneficiary of a trust.)
• Other investment income from a savings account, brokerage account, or other assets. 

For 2025 and 2026:
 

• If a child only has unearned income totaling between $0 to $1,350, they are not required to file a return and do not owe income tax. 
• If a child has unearned income totaling between $1,350 to $2,700, then the income is taxed at the child’s income tax rate. 

Things get interesting once a child’s unearned income is over $2,700. For 2025 and 2026, the IRS says that if a child’s unearned income is more than $2,700, that income may be subject to the “kiddie tax,” which can cause some of the child’s unearned income to be taxed at the parent’s rate if the parent’s rate is higher. 

Keep in mind that the rate can be as high as 37% if the parents' taxable income is:

• Over $751,600 for 2025 
• Over $768,700 for 2026

The kiddie tax was enacted to close the loophole that wealthy taxpayers used to shift investment income to their children, who usually paid lower income tax rates. 

The kiddie tax rules generally apply if:

• The child is under age 19 at the end of the tax year, or
• A full-time student aged 19 through 23 who did not provide over half of their own support during the year.  

If those rules apply and the child’s unearned income exceeds the threshold, the child may need to file Form 8615, Tax for Certain Children Who Have Unearned Income, with their income tax return. This form calculates the child’s tax based on their parents’ tax rate.

 

If Your Child Has Earned and Unearned (Investment) Income

If your child has both earned and unearned (investment) income in the same year, things are a little bit more complicated. First, you will need to determine whether a tax return is required and, if so, whether the kiddie tax rules apply. 

For 2025, your child was required to file a 2025 return if their total earned and unearned income was larger than the sum of:
 

• $1,350, or
• Their earned income (up to $15,300 + $450*). 

For 2026, your child is required to file a 2026 return if their total earned and unearned income is larger than the sum of:
 

• $1,350, or 
• Their earned income (up to $15,650 + $450).

*Note: The $450 listed above is the current inflation-adjusted dollar amount that is included when calculating a dependent’s standard deduction. 

 

Can a Parent Report the Child’s Investment Income Instead?

Sometimes, yes. The IRS allows a parent to elect to report a child’s interest, ordinary dividends, and capital gain distributions on the parent’s income tax return instead of filing a separate return for the child. 

For 2025 and 2026, this election may be available if the child was under age 19 at year-end, or under age 24 and a full-time student, and the child’s only income was from interest, dividends, and capital gain distributions, and their gross income was less than $13,500. This election is made on Form 8814, Parents’ Election to Report Child’s Interest and Dividends, but it is not always the best option, so families should compare the tax result before choosing it. If the child has other unearned income, such as capital gains from the sale of stock, digital assets, or other investments, or rental income, parents may not elect to file Form 8814. 

 

Bottom Line

Kids do not always have to pay taxes, but some do need to file returns. The answer depends on how much they received, whether their income was earned or unearned, and whether the kiddie tax rules apply. If your child has wages, investment income, or both, it is worth checking the current IRS filing requirements before you assume no return is needed. And remember, your child may also be required to file a state tax return. As with all tax matters, there are several less common situations that may fall outside of these general guidelines. 

It is always wise to consult a tax professional to be sure all income is reported correctly. If you are wondering whether you or your child filed their return correctly and are looking for a little peace of mind, support is just a click away. Our prepaid audit defense may be right for you.