Phosphorylation of conserved Y₁S₂P₃T₄S₅P₆S₇ repeats in the C-terminal domain of largest subunit of RNA polymerase II (RNAPII CTD) plays a central role in the regulation of transcription and cotranscriptional RNA processing. Here, we show that Ser phosphorylation of Arabidopsis thaliana RNAPII CTD is governed by CYCLIN-DEPENDENT KINASE F;1 (CDKF;1), a unique plant-specific CTD S₇-kinase. CDKF;1 is required for in vivo activation of functionally redundant CYCLIN-DEPENDENT KINASE Ds (CDKDs), which are major CTD S₅-kinases that also phosphorylate in vitro the S₂ and S₇ CTD residues. Inactivation of CDKF;1 causes extreme dwarfism and sterility. Inhibition of CTD S₇-phosphorylation in germinating cdkf;1 seedlings is accompanied by 3'-polyadenylation defects of pre-microRNAs and transcripts encoding key regulators of small RNA biogenesis pathways. The cdkf;1 mutation also decreases the levels of both precursor and mature small RNAs without causing global downregulation of the protein-coding transcriptome and enhances the removal of introns that carry pre-microRNA stem-loops. A triple cdkd knockout mutant is not viable, but a combination of null and weak cdkd;3 alleles in a triple cdkd123* mutant permits semidwarf growth. Germinating cdkd123* seedlings show reduced CTD S₅-phosphorylation, accumulation of uncapped precursor microRNAs, and a parallel decrease in mature microRNA. During later development of cdkd123* seedlings, however, S₇-phosphorylation and unprocessed small RNA levels decline similarly as in the cdkf;1 mutant. Taken together, cotranscriptional processing and stability of a set of small RNAs and transcripts involved in their biogenesis are sensitive to changes in the phosphorylation of RNAPII CTD by CDKF;1 and CDKDs.