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Unearned income: What is the Kiddie Tax rate in 2022?

The Kiddie Tax Rule exists to tax unearned income of a child from their parents.

family factoring in the kiddie tax

The tax was established in 1986.


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What is the Kiddie Tax?

The kiddie tax is a mechanism for collecting come tax on children’s unearned income. This means that the income came from private means instead of work. Learn more about it here.

This is a way of ensuring that parents can’t move assets that produce income into heir child’s name to reap the benefits of a lower tax bracket. A certain amount of a child’s unearned income is taxed at their parents’ marginal rate.

This applies to everyone 18 or younger or a dependent full-time student younger than 24.


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What is the rate in 2022?

If you are submitting your taxes for the 2021 tax year the rates are:

  • unearned income under $1,100 qualifies for standard deduction
  • the next $1,100 is taxed at the child’s rate
  • unearned income over $2,200 is taxed at the parents’ tax rate

In 2022 the limits are increasing:

  • unearned income under $1,150 qualifies for standard deduction
  • the next $1,150 is taxed at the child’s rate
  • unearned income over $2,300 is taxed at the parents’ tax rate


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