Why Is the Standard Deduction for a Child Only $1,100?

The standard deduction is a key part of the U.S. tax system, reducing taxable income for filers. While adults receive a relatively high standard deduction, children claimed as dependents have a much lower threshold—often just $1,100. This difference can be confusing for parents and young taxpayers alike.

Understanding why this reduced amount exists requires examining how dependent status affects taxation and how different types of income impact deductions.

Dependent Criteria

A child’s tax status as a dependent determines their standard deduction. The IRS defines a dependent based on relationship, residency, age, and financial support. A qualifying child must be under 19 (or under 24 if a full-time student), live with the taxpayer for more than half the year, and not provide more than half of their own financial support. These rules ensure dependents are financially reliant on the taxpayer claiming them.

If multiple people could claim the same child—such as divorced parents—the IRS applies tiebreaker rules. Generally, the parent with whom the child lived the longest during the year has the right to claim them. If time is split equally, the parent with the higher adjusted gross income (AGI) prevails. These rules prevent duplicate claims and ensure tax benefits are distributed fairly.

Earned and Unearned Income

A child’s standard deduction depends on the type of income they receive. The IRS distinguishes between earned and unearned income, each with different tax implications. Earned income includes wages, salaries, and self-employment earnings—money generated through work such as a part-time job or babysitting. Unearned income comes from sources like interest, dividends, and capital gains, which accumulate without direct labor.

The tax treatment of unearned income for dependents is stricter due to the “kiddie tax” rules, introduced in 1986 to prevent high-income parents from shifting investment income to their children to take advantage of lower tax rates. In 2024, a dependent child’s unearned income exceeding $2,500 is taxed at the parent’s marginal rate instead of the child’s lower rate. This discourages excessive income shifting while ensuring investment earnings are taxed appropriately.

Earned income, however, is taxed at the child’s own rate. The standard deduction for dependents is either $1,100 or their total earned income plus $400, whichever is greater, up to the full standard deduction for single filers ($14,600 for 2024). For example, a child earning $3,000 from a summer job can claim a $3,400 deduction, reducing their taxable income to zero. However, if the same child earns $500 in interest from a savings account, that amount remains taxable because it falls under unearned income.

Maximum Deduction Threshold

The maximum standard deduction a child can claim balances tax relief with fairness. Unlike independent taxpayers, who receive a straightforward deduction, dependents face a cap that reflects their reliance on another taxpayer.

The deduction is the greater of $1,100 or earned income plus $400, up to the full standard deduction for single filers ($14,600 in 2024). This means a child earning $10,000 from a job can deduct $10,400, while one earning $16,000 is capped at $14,600. This prevents dependents from receiving a more favorable deduction than independent filers.

If dependents were given unrestricted deductions, they could earn significant amounts tax-free while still benefiting from their parents’ financial support. By capping the deduction, the IRS ensures dependents contribute to the tax system in proportion to their financial independence.

Interaction with Parental Filing

A dependent child’s tax situation affects the tax return of the parent or guardian claiming them. The lower standard deduction for dependents influences taxable income and interacts with other tax benefits tied to the filer’s AGI.

Parents who claim dependents may qualify for the Child Tax Credit (CTC), which provides up to $2,000 per child under 17, with a refundable portion of up to $1,600 in 2024. Eligibility for the full credit phases out for single filers earning over $200,000 and married couples filing jointly earning over $400,000.

Parents may also benefit from the Earned Income Tax Credit (EITC) if they meet income requirements, as well as education-related deductions if the child is a student. When a dependent has taxable income, it may impact these credits indirectly. If a child has significant unearned income, it could push a parent’s AGI higher if they elect to report the child’s income on their return using Form 8814 (Parents’ Election to Report Child’s Interest and Dividends). This could reduce or eliminate certain deductions and credits that phase out at higher income levels.

Possible Reasons for a Reduced Amount

The lower standard deduction for dependents compared to independent taxpayers is intentional. It reflects tax policy objectives, historical precedent, and efforts to prevent tax avoidance strategies that could erode the tax base.

Dependents already receive indirect tax benefits through the household claiming them. Parents or guardians often qualify for tax credits and deductions that reduce their overall tax liability. Allowing a child to claim the full standard deduction while also being included in another taxpayer’s return would create a double benefit, reducing taxable income for the family beyond what the tax code intends. By limiting the child’s deduction, the IRS ensures tax advantages are distributed based on financial dependence rather than allowing excessive tax sheltering.

The standard deduction for dependents has long been structured differently from that of independent filers, with the IRS maintaining a lower threshold to prevent income shifting. Before the Tax Cuts and Jobs Act (TCJA) in 2017, personal exemptions played a larger role in reducing taxable income for families. When personal exemptions were eliminated in favor of a higher standard deduction, dependents did not receive the same proportional increase. This was partly because the tax system assumes most dependents do not have significant living expenses of their own, as their primary financial needs are covered by the household claiming them.