After December 31, 2018, any interest, dividend, royalty or other income received by a child under 18 years old is added to the gross income of the parent, and subject to income tax in Puerto Rico. Only service income, even if not received by the child, is included in the child’s gross income. However, the tax is still considered assessed to the parent if not paid by the child. If the parents have joint custody of the child, then 50% of the income shall be distributed to each of the parents or guardians. 

Earned income is taxable for children up to 16 years old if the amount earned exceeds $9,000 in Puerto Rico. Full-time students with ages between 16 and 26 are exempt on the first $40,000 of earned income under a Special Exclusion.

For federal tax purposes, a dependent child can earn up to approximately $15,000 in 2025 without incurring federal income tax, assuming no unearned income. If the child has unearned income, then the amount paid above the annual IRS thresholds are partially exempt, subject to a preferential rate, and/or subject to the parent’s marginal rate, as applicable.