--- title: "Pay Your Child Tax-Free in 2026: How Much? | Kids Payroll" description: "In 2026, you can pay your child up to $16,100 tax-free and potentially avoid payroll taxes too. Here's exactly how the math works." lang: en json-ld: | [ { "@context": "https://schema.org", "@type": "BlogPosting", "headline": "Pay Your Child Tax-Free in 2026: How Much?", "description": "In 2026, you can pay your child up to $16,100 tax-free and potentially avoid payroll taxes too. Here's exactly how the math works.", "url": "https://kidspayroll.com/blog/pay-child-tax-free-2026/", "image": "https://kidspayroll.com/images/dylan-burj-khalifa.jpg", "author": { "@type": "Person", "name": "Jennifer", "url": "https://kidspayroll.com/about/" }, "publisher": { "@type": "Organization", "name": "Kids Payroll", "url": "https://kidspayroll.com", "logo": { "@type": "ImageObject", "url": "https://kidspayroll.com/favicon.png" } }, "datePublished": "2026-01-15", "dateModified": "2026-01-15", "mainEntityOfPage": { "@type": "WebPage", "@id": "https://kidspayroll.com/blog/pay-child-tax-free-2026/" }, "isPartOf": { "@type": "Blog", "@id": "https://kidspayroll.com/blog/", "name": "Kids Payroll Blog" } }, { "@context": "https://schema.org", "@type": "FAQPage", "mainEntity": [ { "@type": "Question", "name": "How much can I pay my child tax-free in 2026?", "acceptedAnswer": { "@type": "Answer", "text": "In 2026, the standard deduction is $16,100. Your child can earn up to this amount from your business without owing any federal income tax. If you're a sole proprietor, they also owe no FICA taxes." } }, { "@type": "Question", "name": "Do I need to withhold taxes from my child's paycheck?", "acceptedAnswer": { "@type": "Answer", "text": "If your child expects to earn under the standard deduction and you qualify for the FICA exemption, they can claim exempt from withholding on their W-4. You would not withhold income tax or FICA from their paycheck." } }, { "@type": "Question", "name": "Is the $16,100 limit per child or total?", "acceptedAnswer": { "@type": "Answer", "text": "It's per child. Each child can earn up to $16,100 tax-free independently. If you have two children working in your business, each can earn up to $16,100 without federal income tax." } } ] }, { "@context": "https://schema.org", "@type": "BreadcrumbList", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://kidspayroll.com" }, { "@type": "ListItem", "position": 2, "name": "Blog", "item": "https://kidspayroll.com/blog/" }, { "@type": "ListItem", "position": 3, "name": "How Much Can I Pay My Child Tax-Free in 2026?", "item": "https://kidspayroll.com/blog/pay-child-tax-free-2026/" } ] }, { "@context": "https://schema.org", "@type": "BreadcrumbList", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://kidspayroll.com" }, { "@type": "ListItem", "position": 2, "name": "Blog", "item": "https://kidspayroll.com/blog" }, { "@type": "ListItem", "position": 3, "name": "How Much Can I Pay My Child Tax-Free in ..." } ] } ] --- [Kids Payroll ](/) FeaturesHow It WorksBenefits[State Laws](/state-labor-laws/)[Free Guide](/guide/)[Tax Calculator](/tax-calculator/)[About](/about/)[Blog](/blog/)[FAQ](/faq/)[Download App](https://apps.apple.com/us/app/kids-payroll-pay-your-kids/id6755955657) 1. [Home ](/) 2. [Blog](/blog/) 3. How Much Can I Pay My Child Tax-Free in ... Tax Strategy # How Much Can I Pay My Child Tax-Free in 2026? January 2026 6 min read _Last updated: January 2026_ ## Table of Contents - [The Standard Deduction: Your Child's Tax-Free Threshold](#standard-deduction) - [Payroll Taxes: Where the Real Savings Are](#payroll-taxes) - [The Complete Tax Picture for 2026](#complete-picture) - [What If My Business Is an S-Corp?](#s-corp) - [How Much Should I Actually Pay?](#how-much-to-pay) - [Beyond Tax-Free: The Roth IRA Bonus](#roth-ira-bonus) - [State Taxes: Don't Forget](#state-taxes) - [Summary: 2026 Tax-Free Limits](#summary) - [How Kids Payroll Helps](#how-kids-payroll-helps) - [Frequently Asked Questions](#faq) If you're a business owner considering hiring your kids, you're probably wondering: how much can they earn without paying taxes? The short answer for 2026: up to **$16,100** in federal income tax-free (the standard deduction amount). But there's more to the story. Depending on your business structure, you might also avoid payroll taxes, potentially saving your family thousands more. Here's the complete breakdown. * * * GUIDE #### Want the full 7-step playbook as a PDF? Get the same guide my readers use to set this up correctly the first time. Sent to your inbox in 60 seconds. Get the Guide → ## The Standard Deduction: Your Child's Tax-Free Threshold Every taxpayer, including children, gets a standard deduction. For 2026, it's **$16,100** for single filers. This means your child can earn up to $16,100 and owe **zero federal income tax**. **Example:** - Your child earns $16,100 working for your business - Standard deduction: $16,100 - Taxable income: $0 - Federal income tax owed: **$0** If your child earns more than $16,100, only the amount above that threshold is taxed, and it's taxed at their rate (10% on the first portion of taxable income), not yours. * * * ## Payroll Taxes: Where the Real Savings Are Income tax is just one piece. **Payroll taxes** are where business owners can save even more depending on their business structure. ### Payroll Taxes Explained When you hire an employee, you typically pay: - **Social Security tax:** 6.2% employer + 6.2% employee = 12.4% total - **Medicare tax:** 1.45% employer + 1.45% employee = 2.9% total - **FUTA (federal unemployment):** 0.6% employer only on the first $7,000 Combined, that's **15.3%** in FICA taxes alone split between employer and employee. ### When You Can Avoid Payroll Taxes If your business is a **sole proprietorship** or a **spousal partnership** (including single-member LLCs and husband-wife LLCs), and your child is under 18, you don't have to pay or withhold: - Social Security tax - Medicare tax - FUTA (until age 21) That's **15.3% in savings** on every dollar you pay them. **Example:** You pay your 16-year-old $16,100. Payroll tax savings: $16,100 × 15.3% = **$2,463** ### This Exemption Does NOT Apply If: - Your business is an S-Corp or C-Corp - Your LLC has elected S-Corp taxation - Your partnership includes non-parent partners In those cases, you must withhold and pay payroll taxes like any other employee. * * * ## The Complete Tax Picture for 2026 Let's put it all together for a sole proprietor or spousal partnership with a child under 18: If Your Child Earns Income Tax Payroll Tax Total Tax $5,000 $0 $0 **$0** $10,000 $0 $0 **$0** $16,100 $0 $0 **$0** $20,000 ~$390 $0 **~$390** Your child can earn $16,100 **completely tax-free**. Above that, they pay a small amount of income tax but still no payroll taxes if under 18 and you qualify. ### Compare That to What YOU Would Pay On that same $16,100, if you're in the 24% bracket: - Income tax: $3,864 - Self-employment tax (15.3%): $2,463 - **Total: $6,327** By paying your child instead of keeping the income yourself, your family saves **over $6,000 in taxes** on $16,100. * * * ## What If My Business Is an S-Corp? If you have an S-Corporation, the FICA exemption doesn't apply. Your child will be subject to payroll taxes like any other employee. However, you still benefit from: - A business deduction for wages paid - Shifting income to your child's lower tax bracket - Creating earned income for Roth IRA contributions The math isn't as favorable, but it can still make sense. Work with your CPA to run the numbers for your specific situation. * * * ## How Much Should I Actually Pay? Just because your child _can_ earn $16,100 tax-free doesn't mean you should pay them that much. The IRS requires wages to be **reasonable** for the work performed. Factors that matter: - Your child's age - The complexity of tasks - Hours actually worked - What you'd pay a non-family member **Examples:** - A 10-year-old working 5 hours/week at $10/hour = $2,600/year ✓ - A 16-year-old working 15 hours/week at $15/hour = $11,700/year ✓ - A 7-year-old earning $16,100 for "helping out" = raises red flags ✗ Document the work performed and keep it reasonable. * * * ## Beyond Tax-Free: The Roth IRA Bonus Here's where it gets even better: your child's earned income makes them eligible to contribute to a **Roth IRA**. In 2026, they can contribute up to **$7,500** or their total earned income, whichever is less. That money grows tax-free and comes out tax-free in retirement. A child who contributes $7,500/year from ages 14-18 could have **over $1 million by age 65**, assuming average market returns. * * * ## State Taxes: Don't Forget This article focuses on federal taxes. Your state may have: - Its own income tax (some states have none) - Its own standard deduction amount - Different rules for family employment Check your state's requirements or ask your CPA. * * * ## Summary: 2026 Tax-Free Limits Scenario Tax-Free Amount Payroll Tax Exempt? Sole proprietorship, child under 18 $16,100 **Yes** Spousal partnership, child under 18 $16,100 **Yes** S-Corp or C-Corp, any age $16,100 No Partnership with non-parent partners $16,100 No Child age 18+ $16,100 No (FICA applies) * * * ## How Kids Payroll Helps Kids Payroll automatically calculates your child's earnings and shows you: - Year-to-date pay - How close they are to the standard deduction - Roth IRA contribution room - Projected annual earnings * * * ## Frequently Asked Questions ### Can I pay each of my kids $16,100? Yes. The standard deduction applies per person. If you have three kids doing legitimate work, each can earn up to $16,100 tax-free. That's $48,300 shifted out of your income. ### What if my child has other income? The $16,100 standard deduction covers all income, not just from your business. If your child also has a summer job earning $3,000, their total tax-free threshold is still $16,100. ### Do I have to withhold income tax from my child's pay? If your child will owe no tax (earning under the standard deduction), they can claim exemption from withholding. ### Can I pay my child more than $16,100? Yes, but the amount above $16,100 will be subject to income tax at your child's rate. Still a lower rate than you'd pay. * * * _**Disclaimer:** This article is for educational purposes only and does not constitute tax or legal advice. Consult a qualified CPA or tax professional for guidance specific to your situation._ ## Related Articles [Tax Strategy ### FICA Exemption for Minor Children: How Business Owners Save on Payroll Taxes Business owners can skip FICA taxes when paying children under 18. Here's exactly how the exemption works, who qualifies, and how much you can save in 2026. Read article](/blog/fica-exemption-minor-children/) [Tax Strategy ### Can I Pay My Child Wages During Summer and Holidays Only and Still Max Out Their Roth IRA Contribution? Paying your child only during summer and holiday breaks can absolutely qualify them for a Roth IRA, as long as their total earned wages for the year meet or exceed the contribution amount. Here's how to do it right. Read article](/blog/summer-holiday-wages-max-roth/) [Tax Strategy ### Can I Deduct My Child's Wages as a Business Expense? (2026) Yes, wages paid to your child for legitimate business work are tax-deductible. Here's how business owners claim the deduction and what the IRS requires. Read article ](/blog/deduct-child-wages-business-expense/) GUIDE #### Want the full 7-step playbook as a PDF? Get the same guide my readers use to set this up correctly the first time. Sent to your inbox in 60 seconds. Get the Guide → [Calculate Your Savings](/tax-calculator/) ### Kids Payroll Transform "paying kids through your business" from a confusing tax loophole into a streamlined, automated, family-wealth engine. 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