The informal name of a provision in the tax code that applies to a child’s unearned income (such as interest, capital gains, and dividends). This tax applies to children under the age of 19 (for full-time students, under the age of 24).

Under the kiddie tax, in 2025 the first $1,350 of a dependent child’s unearned income is tax-free (offset by the child’s standard deduction), the second $1,350 of unearned income is taxed at the child’s tax rate, and any amount over $2,700 is taxed at the parents’ top marginal tax rate.

The kiddie tax applies to young people up to the age of 24 if they are full-time students (unless they support themselves). This can affect strategies for using nonqualified deferred compensation (see a related article).