For 2026, a child can earn up to $16,100 in wages before owing any federal income tax, because the standard deduction shields that full amount. But how much money a child can earn before paying taxes depends entirely on the type of income. Investment income triggers a filing requirement at just $1,350, and self-employment earnings like babysitting, lawn mowing, or freelance work cross the line at only $400 in net profit.
Wages and Job Income: $16,100 for 2026
Earned income covers wages, salaries, tips, and other pay for work. A dependent child with only earned income must file a federal return if that income tops $16,100 for 2026, which matches the standard deduction for a single filer.1Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 A child earning exactly that amount pays nothing, because the deduction cancels the income out.
The standard deduction for a dependent isn’t automatically the full $16,100, though. It’s limited to the greater of $1,350 or the child’s earned income plus $450, capped at $16,100.2Internal Revenue Service. Rev. Proc. 2025-32 For a teenager with a summer job paying $8,000, that formula produces an $8,450 deduction, more than enough to zero out the tax. The formula only bites when a child has investment income mixed in.
Investment Income: $1,350 Triggers Filing
Unearned income means interest, dividends, capital gains, and trust distributions. The threshold here is much lower: a dependent child must file if unearned income exceeds $1,350 for 2026.2Internal Revenue Service. Rev. Proc. 2025-32 A custodial brokerage account throwing off $1,400 in dividends creates a filing obligation even if the child never worked a day that year.
Above $2,700, a separate rule called the Kiddie Tax kicks in and taxes the excess at the parent’s marginal rate rather than the child’s.3Internal Revenue Service. Topic No. 553, Tax on a Child’s Investment and Other Unearned Income (Kiddie Tax) The tiers for 2026 work like this: the first $1,350 is tax-free, the next $1,350 is taxed at the child’s own rate (typically 10%), and anything above $2,700 is taxed at the parent’s rate, which can run as high as 37%.4Internal Revenue Service. Instructions for Form 8615 (2025)
The Kiddie Tax applies when a child had more than $2,700 in unearned income, at least one parent was alive at year-end, and the child is under 18, is 18 and didn’t provide more than half their own support, or is a full-time student aged 19 through 23 who didn’t provide more than half their own support.5Internal Revenue Service. 2025 Instructions for Form 8615 A child with modest investment income under $2,700 stays entirely below the trigger.
Self-Employment Income: Just $400
Self-employment income has the lowest threshold of all. A child with net earnings of $400 or more from self-employment must file.6Internal Revenue Service. Self-Employed Individuals Tax Center Net earnings means gross receipts minus ordinary business expenses. A teenager pulling in $2,000 from mowing lawns who spent $1,650 on equipment and gas has net earnings of $350, which stays below the line. That same $2,000 with only $100 in expenses lands at $1,900 in net earnings, well past $400.
What makes self-employment costly is the self-employment tax, which covers Social Security and Medicare. The rate is 15.3%: 12.4% for Social Security and 2.9% for Medicare, applied to 92.35% of net earnings.7Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes) A child can owe this tax even when their total income sits far below the $16,100 standard deduction. A kid netting $3,000 from freelance work owes roughly $424 in self-employment tax while owing zero income tax.
A self-employed child expecting to owe $1,000 or more in combined income and self-employment tax should make quarterly estimated payments in April, June, September, and January of the following year to avoid an underpayment penalty.8Internal Revenue Service. Estimated Taxes
When a Child Has Both Wages and Investment Income
When both types of income are in play, a specific formula decides whether the child must file. The child files if gross income (earned plus unearned) exceeds the larger of:9Internal Revenue Service. Check if You Need to File a Tax Return
- $1,350, or
- Earned income (up to $15,650) plus $4502Internal Revenue Service. Rev. Proc. 2025-32
Take a child with $5,000 in wages and $1,000 in dividends. Gross income is $6,000. The two comparison figures are $1,350 and $5,450 (the $5,000 in wages plus $450). The larger is $5,450, and $6,000 tops it, so the child must file. Drop those dividends to $200 with the same wages, and gross income of $5,200 stays below $5,450. No filing required.
Filing Can Still Be Worth It Below the Threshold
Even when a child earns below every threshold, filing often pays. If an employer withheld federal income tax from paychecks, the only way to get that money back is to file a return and claim a refund.10Internal Revenue Service. Instructions for Form 1040 This is the common summer-job scenario: a teenager earning $4,000 might have a few hundred dollars withheld, owes nothing because $4,000 is far below $16,100, but never sees the refund unless a return is filed.
Filing a return for the child does not disturb the parent’s ability to claim the child as a dependent. A child can file their own return and still be claimed on the parent’s return.11Internal Revenue Service. Dependents The dependency tests turn on age, relationship, residency, and support, not on whether a separate return exists. The one restriction: the child cannot file jointly with a spouse unless the joint return is filed solely to claim a refund.
Wages Paid by a Parent’s Business
Families running a sole proprietorship get a distinct break. Wages paid to a child under 18 who works in a parent’s unincorporated business are exempt from Social Security and Medicare taxes.12Internal Revenue Service. Family Employees The same exemption reaches a partnership if both partners are the child’s parents. Neither the child nor the parent pays the 7.65% FICA share, saving 15.3% combined against hiring someone outside the family.
Those wages remain subject to income tax withholding, but if the child stays under $16,100 for the year, the standard deduction erases the income tax entirely.1Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 The parent deducts the wages as a business expense, and the child owes zero federal tax. The work has to be real and the pay reasonable for the child’s age and duties.
State Taxes and Financial Aid
Every threshold above is federal. Most states with an income tax set their own filing rules for dependents, and those thresholds are often lower than the federal ones. A child who owes nothing to the IRS may still owe a state return. Check your state tax agency for the specific numbers.
For families with college on the horizon, a child’s earnings can also affect financial aid. The FAFSA shields part of a student’s earnings through a student income protection allowance, set at $11,770 for dependent students in the 2026–27 award year.13Federal Register. Federal Need Analysis Methodology for the 2026-27 Award Year Earnings above that allowance reduce the student’s aid eligibility. A child earning $18,000 from summer and part-time work would have roughly $6,230 counted against them in the aid formula.