While most discussion about the Setting Every Community Up for Retirement Enhancement (SECURE) Act focuses on retirement security provisions, not much attention has been given to the law’s reversal of the kiddie tax laws.
The kiddie tax is a series of provisions that determine how unearned (investment) income of people under age 19 is taxed. For many years, the investment income of young people (over a certain amount) was taxed at their parents’ highest marginal tax rate. The Tax Cuts and Jobs Act (TCJA) overhauled the kiddie tax in late 2017 by taxing young people at the rate paid by trusts and estates, increasing the income taxes for many of them.
The SECURE Act repeals the TCJA changes and restores the pre-2018 kiddie tax rules, which may create a problem for some families. Find out why here.