Unearned Income of children rates change quickly in new tax law

The “kiddie tax” has been modified under the Tax Cuts and Jobs Act (TCJA). Under current law, a child’s net unearned income is taxed at the parents’ tax rate if that rate is higher than the child’s. The remainder of the child’s taxable income is taxed at the child’s rate. Under the TCJA, for years beginning after Dec. 31, 2017, the taxable income of a child attributable to earned income is taxed under the rates for single people, and taxable income of a child attributable to net unearned income is taxed according to the brackets applicable to trusts and estates.