Kiddie Tax 2025. A comprehensive federal, state & international tax resource that you can trust to provide you with answers to your most important tax questions. The kiddie tax has seen many iterations, but current rules tax a minor child's unearned income—including capital gains distributions, dividends, and interest income—at the.

The first $1,250 of unearned income. Introduced as part of the tax reform act of 1986, the kiddie tax prevents parents from shifting wealth into their children’s names to reduce their tax liability.