Note: The editors of Kiplinger's Personal Finance magazine and the Kiplinger Tax Letter are answering questions about the new tax law from subscribers to our free Kiplinger Today daily email. See other reader Q&As about the new tax law, or submit your own question.
Question: Now that the trust and estate tax rates apply for the kiddie tax, is there any break for long-term capital gains and qualified dividends?
Answer: Yes. The kiddie tax now uses the trust and estate rates – rather than the parents’ tax rate – to tax unearned income in excess of $2,100 earned by a child under age 19 or, if the child is a full-time student, under age 24. The trust and estate rates on ordinary income range from 10% to 37%, with the top bracket starting at just $12,500.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Long-term gains and qualified dividends are taxed at 0% when income (including the gains and dividends) is under $2,600 and 20% when income exceeds $12,700. In between those amounts, the rate is 15%. Also, note that for kiddie tax purposes, the 3.8% surtax on net investment income hits income over $12,700.
-
Dow Rips 846 Points to New All-Time High: Stock Market TodayFed Chair Jerome Powell seems ready to cut interest rates in the fall but will still rely on incoming economic data about inflation and employment.
-
Test Out Your Retirement Before You Call It QuitsIt's not easy to take a retirement back. Before you make the plunge, test the waters with these tips.
-
Stay NJ Could Give You $6,500: The Deadline You Can't MissProperty Taxes New Jersey has a new property tax relief program for 2025. But the application deadline is fast approaching.
-
How the 2025 Child Tax Credit Rules Impact Single ParentsTax Credits New changes to family tax credits, like the Child Tax Credit, will impact the eligibility of some households.
-
The Fall Garden Tax? What to Plant and How to PrepareTax Tips Fall gardening could increase your taxes this season. Here’s what to know while planting in 2025.
-
How Your 2025 Summer Wedding Could Save You Money on TaxesTax Breaks There are some wedding expenses that are tax-deductible, and you don’t want to miss out on savings.
-
Texas Sales Tax-Free Weekend 2025Tax Holiday Here's what you needed to know about the Texas sales tax holiday.
-
Retirees Should Watch These Four Key Tax Changes in 2025Tax Changes This year brings key tax changes that could affect your retirement taxes and income.
-
The Most Tax-Friendly State for Retirement in 2025: Here It IsRetirement Tax How do you retire ‘tax-free’? This state doesn’t tax retirement income, has a low median property tax bill, and even offers savings on gas. Are you ready for a move?
-
Tariff Stimulus Checks Coming? New Proposal Seeks Tax Rebates for US WorkersTax Breaks A new GOP bill proposes to send $600 in tariff rebate checks to eligible taxpayers. Is there a catch?
