In research in my laboratory, we have found that young children do not usually understand sarcasm until they are 5–6 years old, and they may not find sarcasm funny until they are even older. We study how children understand sarcasm by presenting short puppet shows, in which one puppet says something sarcastic to the other puppet; for instance, "That was a great play" in a puppet show about a soccer game, after one puppet kicks the ball wide of the net and out of bounds. We then ask children a series of simple questions to figure out whether they understood the sarcasm. This work has shown that while 5- to 6-year-old children may understand that the speaker means the opposite of what he or she has said, the children do not understand why the speaker would talk that way; they do not see the humor. Children start to see the humor in sarcasm around 8 or 9 years of age.

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Go to source: https://kids.frontiersin.org/article/10.3389/frym.2018.00056