Kiddie tax can apply to the unearned income of persons under the age of 24.

Before the new Tax Cuts and Jobs Act implementation, for children who had more than the prescribed amount of unearned income for the tax year, that income was taxed to the child, but at the rate that would apply if that income were included in the parents' return. In other words, it was taxed at the parents' tax rate instead of the child's typically lower rate.

Beginning after December 31, 2017, the estates' and trusts' ordinary and capital gains rates apply to the unearned income of a child that exceeds the prescribed amount. In 2018, under the new Tax Cuts and Jobs Act, the kiddie tax will be based on the much more onerous tax rates.

In many cases, the kiddie tax will be higher than it was. Thus, taxpayers affected by the kiddie tax will want to do more to avoid it..