Federal accountability policy mandates that states administer standardized tests beginning in third grade. In turn, third-grade test scores are often viewed as a key indicator in policy and practice. Yet literacy struggles begin well before third grade, as do racial and socioeconomic disparities in children's literacy skills. Kindergarten readiness assessments provide a unique opportunity to better understand the emergence of literacy disparities. We use unique kindergarten literacy data from nearly every school division in Virginia to document the relationship between children's early literacy skills and their later reading proficiency. Comparing children with similar literacy skills at kindergarten entry, we find significant racial and socioeconomic differences in the likelihood a child is proficient on their third-grade reading assessment. [This is the online first version of an article published in "Educational Researcher."]