2023 Kiddie Tax Threshold
For 2023, the Kiddie Tax Threshold figures are $1,250 (Unearned income reduction amount) and $2,500 (Unearned income filing trigger).
Effective 2023-01-01Source: Rev. Proc. 2022-38 (IRS)Verified 2026-09-03
Unearned income filing triggerSource: 2023 Instructions for Form 8615, Tax for Certain Children Who Have Unearned Income (IRS)Verified 2026-09-03
Compared with 2022
| Item | 2022 | 2023 | Change |
|---|---|---|---|
| Unearned income reduction amount | $1,150 | $1,250 | +$100 (+8.7%) |
| Unearned income filing trigger | $2,300 | $2,500 | +$200 (+8.7%) |
Who it applies to
Children subject to the kiddie tax under IRC § 1(g) for taxable years beginning in 2023
What changed this year, and why
The unearned income threshold used to reduce net unearned income subject to the kiddie tax was adjusted for inflation to $1,250, up from $1,150 for 2022.
Common questions
- What does the $1,250 threshold do?
- The unearned income threshold of $1,250 reduces net unearned income on a child's return that is subject to the kiddie tax. It is the same $1,250 amount used to determine whether a parent may elect to include a child's gross income in the parent's return.
The five conditions, and the three age tests
For 2023, Form 8615 must be filed for a child who satisfies all five conditions listed by the IRS. First, the child had more than $2,500 of unearned income. Second, the child is required to file a tax return. Third, the child must meet one of three age tests: either the child was under age 18 at the end of 2023; or the child was age 18 at the end of 2023 and did not have earned income that exceeded half of the child's support; or the child was a full-time student at least age 19 and under age 24 at the end of 2023 and did not have earned income that exceeded half of the child's support. Fourth, at least one of the child's parents was alive at the end of 2023. Fifth, the child does not file a joint return for 2023. The term "child" includes a legally adopted child and a stepchild, and the rules apply whether or not the child is a dependent. If neither parent was living at the end of the year, the kiddie tax rules do not apply.
Form 8615 must be filed for any child who meets all of the following conditions. 1. The child had more than $2,500 of unearned income. 2. The child is required to file a tax return. 3. The child either: a. Was under age 18 at the end of 2023, b. Was age 18 at the end of 2023 and didn’t have earned income that was more than half of the child's support, or c. Was a full-time student at least age 19 and under age 24 at the end of 2023 and didn’t have earned income that was more than half of the child's support. (Earned income is defined later. Support is defined below.) 4. At least one of the child's parents was alive at the end of 2023. 5. The child doesn’t file a joint return for 2023.
2023 Instructions for Form 8615, Tax for Certain Children Who Have Unearned Income (IRS)
What counts as unearned income
For the 2023 Kiddie Tax (Form 8615), the IRS defines unearned income as income that is not received as pay for work actually performed - that is, it is essentially everything other than salaries, wages, and similar earned income. The definition is broad and captures the kinds of passive or investment returns that the Kiddie Tax rules are designed to subject to the parent's marginal rate once a child's unearned income exceeds $2,500. Specifically, it includes taxable interest, dividends, capital gains (including capital gain distributions), rents, royalties, pension and annuity income, taxable scholarship and fellowship grants that are not reported on Form W-2, unemployment compensation, alimony, the taxable part of social security and pension payments, and any income (other than earned income) the child receives as a beneficiary of a trust. In other words, if a child receives money from investments, trusts, or other non-work sources rather than from a job, it counts toward the $2,500 filing threshold and is the income that is taxed at the parent's rate under the Kiddie Tax.
Unearned Income Unearned income is generally all income other than salaries, wages, and other amounts received as pay for work actually performed (earned income). It includes taxable interest, dividends, capital gains (including capital gain distributions), rents, royalties, pension and annuity income, taxable scholarship and fellowship grants not reported on Form W-2, unemployment compensation, alimony, the taxable part of social security and pension payments, and income (other than earned income) received as the beneficiary of a trust.
2023 Instructions for Form 8615, Tax for Certain Children Who Have Unearned Income (IRS)
The support test that decides whether an older child is caught
For older children caught by the Kiddie Tax, the IRS requires that earned income not exceed half of the child's support. If earned income is more than half of support, the child does not meet the age-based conditions for filing Form 8615. Support means all amounts spent to provide the child with food, lodging, clothing, education, medical and dental care, recreation, transportation, and similar necessities. When adding up the child's total support, count amounts provided by the parent, by the child, and by anyone else. One important exception: a scholarship received by a child who is a full-time student is not counted as support. This support test works together with the $1,250 unearned income threshold to determine whether an older child must file the federal Kiddie Tax form for 2023. The rule ensures that self-supporting young adults are not treated the same as dependent children who receive most of their living expenses from parents or other sources.
Support. Your support includes all amounts spent to provide the child with food, lodging, clothing, education, medical and dental care, recreation, transportation, and similar necessities. To figure your child’s support, count support provided by you, your child, and others. However, a scholarship received by your child isn’t considered support if your child is a full-time student.
2023 Instructions for Form 8615, Tax for Certain Children Who Have Unearned Income (IRS)
Reporting the child's income on the parent's return instead
For 2023, instead of filing Form 8615 for a child subject to the kiddie tax, a parent may be able to elect to report the child's interest, ordinary dividends, and capital gain distributions directly on the parent's own return. If the parent makes this election, the child will not have to file a separate tax return or Form 8615. However, the IRS warns that the federal income tax on the child's income, including qualified dividends and capital gain distributions, may be higher if this election is made. Details of the election and how to make it are found on Form 8814, Parents' Election To Report Child's Interest and Dividends. This option can simplify filing by eliminating the child's separate return, but families should compare the tax cost before choosing it, because applying the parent's marginal rate to the child's investment income can produce a larger total tax than if the child filed independently.
The parent may be able to elect to report the child’s interest, ordinary dividends, and capital gain distributions on the parent’s return. If the parent makes this election, the child won’t have to file a return or Form 8615. However, the federal income tax on the child’s income, including qualified dividends and capital gain distributions, may be higher if this election is made.
2023 Instructions for Form 8615, Tax for Certain Children Who Have Unearned Income (IRS)
Why the child's own bracket is not the end of it
The purpose of Form 8615 is to compute the additional tax that applies when the parent's tax rate is higher than the child's own rate. For 2023, for children under age 18 and certain older children described in the Who Must File section, unearned income over $2,500 is taxed at the parent's rate if the parent's rate is higher than the child's. If the child's unearned income is more than $2,500, Form 8615 is used to figure the child's tax. This means that even if the child is in a low tax bracket on his or her own return, the excess unearned income above the threshold may be taxed at whatever rate applies to the parent's taxable income, which can be substantially higher. The unearned income threshold for 2023 is $1,250, and the $2,500 amount is the point at which the parent's rate begins to apply to the child's investment income. The form ensures that families cannot shift investment income to a child's lower bracket to reduce the overall tax.
For children under age 18 and certain older children described below in Who Must File, unearned income over $2,500 is taxed at the parent's rate if the parent's rate is higher than the child's. If the child's unearned income is more than $2,500, use Form 8615 to figure the child's tax.
2023 Instructions for Form 8615, Tax for Certain Children Who Have Unearned Income (IRS)
A January 1 birthday counts the child a year older
For purposes of the 2023 kiddie tax, a child born on January 1 is treated as having reached the next age milestone at the end of 2023. A child born on January 1, 2006 is considered 18, one born on January 1, 2005 is considered 19, and one born on January 1, 2000 is considered 24. This matters because the kiddie tax applies based on the child's age at year-end. A child treated as 18 must not have had earned income exceeding half of their support. A child treated as 19 must have been a full-time student whose earned income did not exceed half of their support. A child treated as 24 does not use Form 8615 at all. This rule ensures that children whose birthdays fall on the first day of the year are placed in the correct age category for determining whether the kiddie tax applies in 2023.
Certain January 1 birthdays. Use the following chart to determine whether certain children with January 1 birthdays meet condition 3 under Who Must File, earlier. IF you were born on... THEN, at the end of 2023, you are considered to be... January 1, 2006 18* January 1, 2005 19** January 1, 2000 24*** * This child isn't under age 18. The child meets condition 3 only if the child didn't have earned income that was more than half of the child's support. ** This child meets condition 3 only if the child was a full-time student who didn't have earned income that was more than half of the child's support. *** Don’t use Form 8615 for this child.
2023 Instructions for Form 8615, Tax for Certain Children Who Have Unearned Income (IRS)
A capital loss bigger than the offset does not just disappear
When a child has capital losses that exceed their capital gains for 2023, those losses are applied against the child's unearned income for purposes of the kiddie tax. The child may use up to $3,000 of the excess loss to offset other unearned income such as interest and dividends. If the capital loss is larger than this offset, the remainder does not simply vanish. Any difference over $3,000 is carried to the next year, where it can be used in future years' unearned income calculations. This carryover rule ensures that a child who suffers a large investment loss in one year can still benefit from that loss in subsequent years, even after the kiddie tax calculation is complete for the current year. The $1,250 unearned income threshold for 2023 is applied after these capital loss adjustments are made.
If the capital losses are more than the capital gains, the difference (up to $3,000 ($1,500 in the case of a married individual filing a separate return)) is subtracted from your child’s interest, dividends, and other unearned income. Any difference over $3,000 is carried to the next year.
2023 Instructions for Form 8615, Tax for Certain Children Who Have Unearned Income (IRS)
If a parent's income later changes, the child's tax has to be refigured
The kiddie tax calculation on Form 8615 depends on the parents' tax return information. If the parents' income changes after the child's return is filed, the child's tax must be refigured using the adjusted amounts. The child's tax must also be refigured if there are changes to the net unearned income of other children for whom the parent is required to file a Form 8615. If the child's tax changes as a result of these adjustments, the parent must file Form 1040-X to report the corrected amount. This amended return requirement ensures that the child's tax liability accurately reflects the parents' actual income and the correct number of children subject to the kiddie tax. Failure to file an amended return when required could result in underpayment of tax.
If the parents’ income changes after the child’s return is filed, the child’s tax must be refigured using the adjusted amounts. The child's tax must also be refigured if there are changes to the net unearned income of other children for whom the parent is required to file a Form 8615. If the child's tax changes, file Form 1040-X.
2023 Instructions for Form 8615, Tax for Certain Children Who Have Unearned Income (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
Rev. Proc. 2022-38 (IRS)
- Unearned income reduction amount
the amount in § 1(g)(4)(A)(ii)(I), which is used to reduce the net unearned income reported on the child’s return that is subject to the “kiddie tax,” is $1,250.
2023 Instructions for Form 8615, Tax for Certain Children Who Have Unearned Income (IRS)
- Unearned income filing trigger
1. The child had more than $2,500 of unearned income.