Reviewed by the Penny Time editorial team
Do Minors Pay Taxes? A 2026 Guide for Parents and Teens
Quick answer: Yes, minors pay taxes once their income passes the IRS limits. For 2026, a teen claimed as a dependent must file a federal return if they earn more than $16,100 in wages, have more than $1,350 in unearned income, or make more than $400 from self-employment. Most teens with a part-time job earn under the wage limit, so they owe no income tax, but Social Security and Medicare still come out of every paycheck.
This guide is educational information, not tax advice. Tax thresholds change every year and every family's situation is different. Check IRS.gov or talk to a tax professional before filing.
When does a minor have to file a tax return?
There is no minimum age for paying taxes. What matters is how much a child earns and what kind of income it is. A dependent child has to file a 2026 federal return if any of these apply:
| Type of income | Must file if more than | Example |
|---|---|---|
| Earned income (wages, salary, tips) | $16,100 | A summer and after-school job |
| Unearned income (interest, dividends) | $1,350 | A custodial brokerage or savings account |
| Self-employment (mowing, tutoring, reselling) | $400 | A small side hustle paid in cash |
Source: IRS dependent filing rules for tax year 2026. The $16,100 figure is the 2026 standard deduction for a single dependent.
The self-employment number surprises a lot of parents. A teen who makes more than $400 mowing lawns or reselling sneakers has to file and pay self-employment tax (Social Security and Medicare on their own earnings), even though that is far below the wage threshold.
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Earned income vs unearned income
The tax rules treat two kinds of income very differently, so it helps to know which is which:
- Earned income is money a teen works for: wages from a job, tips, or self-employment. It is taxed at the teen's own (usually very low) rate.
- Unearned income is money that comes from assets: interest, dividends, and capital gains from a savings or custodial investment account. This is where the kiddie tax can apply.
What is the kiddie tax?
The kiddie tax stops families from shifting investments into a child's name just to get a lower tax rate. It applies only to unearned income, not to wages from a job. For 2026 it works in three layers:
| Child's unearned income | How it is taxed |
|---|---|
| First $1,350 | Tax-free |
| Next $1,350 (up to $2,700) | Taxed at the child's rate |
| Over $2,700 | Taxed at the parent's marginal rate |
The kiddie tax applies to children under 18, and to dependent full-time students aged 19 to 23. For most kids with a normal savings account, interest never gets close to $1,350, so the kiddie tax never comes up. It mainly matters for children with sizable custodial investment accounts.
Does my teen get taxes taken out of their paycheck?
Usually yes, and this is the part that confuses new workers. Two different things can come out of a teen's W-2 paycheck:
- FICA (Social Security and Medicare): 7.65% of wages, withheld no matter how little the teen earns. This is not refundable. One narrow exception: a child under 18 who works for a parent's unincorporated business is exempt from FICA.
- Federal income tax: withheld based on the Form W-4 the teen fills out when hired. If the teen earns under $16,100 for the year, this withholding can be claimed back as a refund.
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Will my teen get a tax refund?
Often, yes. If an employer withheld federal income tax during the year but the teen earned less than the $16,100 standard deduction, the teen owes no income tax and can get that withholding back by filing a simple return. They will not get FICA back, but reclaiming withheld income tax is a common reason teens file even when they are not required to.
How to help your teen file their first return
- Find their Form W-2 (from a job) or 1099 forms (from freelance or investment income), usually available by late January.
- Check the thresholds above to see whether filing is required, or worth it for a refund.
- Use free filing. The IRS Free File program covers simple returns at no cost.
- Sit with them the first time. Filing together turns a chore into a money lesson they will use for life.
Key takeaway
Minors do pay taxes, but most teens with a part-time job earn well under the 2026 wage threshold and owe no federal income tax. The two things parents most often miss are that FICA comes out of every paycheck regardless of age, and that a side hustle over $400 triggers self-employment tax. When in doubt, filing a simple return is cheap insurance and a great first money lesson.
Sources
- IRS: Topic no. 553, Tax on a child's investment and other unearned income (kiddie tax)
- Kiplinger: Tax Filing Requirements for Minors in 2026
- Fidelity: Understand the Kiddie Tax
- IRS Free File
Frequently Asked Questions
-
Yes. Tax rules apply the same way to minors as to adults. A child or teen owes federal income tax once their income passes the IRS thresholds. For 2026 a dependent must file a return if earned income (wages) is over $16,100, if unearned income (interest, dividends) is over $1,350, or if self-employment income is over $400.
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A teen claimed as a dependent can earn up to $16,100 in wages in 2026 without owing federal income tax, because that is the standard deduction amount. Above that, income tax applies. Note that Social Security and Medicare (FICA) are withheld from a paycheck no matter how little the teen earns.
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Usually yes. Employers withhold 7.65% for Social Security and Medicare (FICA) from a teen W-2 paycheck regardless of age, and that is not refundable. They may also withhold federal income tax based on the teen's Form W-4. If the teen ends up earning under the filing threshold, that income tax withholding can be refunded by filing a return.
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The kiddie tax applies to a child's unearned income (interest, dividends, capital gains), not wages. For 2026 the first $1,350 is tax-free, the next $1,350 is taxed at the child's rate, and anything over the $2,700 threshold is taxed at the parent's marginal rate. It applies to children under 18, and to dependent full-time students aged 19 to 23.
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Often yes. If an employer withheld federal income tax and the teen earned under the filing threshold, filing a return is how they get that money back as a refund. Filing also creates a small paper trail and is good first practice. It does not cost anything to file a simple return.
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