One bomb exploded on a road at the entrance to the town and the second was triggered as residents rushed to the scene, sources said.
The blasts also wounded 18 people, including a baby, they added.
Tuz Khurmatu is a majority Kurdish town located in a disputed area of northern Iraq, where both the autonomous Kurdish province and the central government in Baghdad vie for power.
Elsewhere in Iraq four soldiers, including a captain, were killed today in the main northern city of Mosul, police and medics said.
The latest unrest came as an Al Qaeda front group claimed a wave of bombings across Baghdad on Wednesday, when violence nationwide killed 75 people.
The Islamic State of Iraq and the Levant said the attacks were retribution for the executions this month of people convicted of terror-related offences.
Iraq has seen a marked rise in the level of violence this year, coinciding with demonstrations by the Sunni Arab minority against alleged ill treatment at the hands of the Shiite-led government and security forces.
More than 600 people have already been killed so far this month, according to an AFP tally.