Net Investment Income Tax
How the 3.8% net investment income tax works, the income thresholds, what counts as investment income, and a calculator for what you owe.
Net investment income tax calculator
Net investment income tax: the 3.8% surtax
The NIIT is a 3.8% tax on the lesser of your net investment income or the amount by which your modified AGI exceeds $200,000 (single or head of household), $250,000 (married filing jointly) or $125,000 (married filing separately). The thresholds are set by law and aren't adjusted for inflation. It's figured on Form 8960.
Example: single, $60,000 of investment income and $230,000 of MAGI: MAGI is $30,000 over the threshold, so the tax is 3.8% × $30,000 = $1,140.
What counts as net investment income
Interest, dividends, capital gains, rental and royalty income, non-qualified annuities and passive business income, minus related expenses. It doesn't include wages, IRA and 401(k) distributions, Social Security, or gain on a home sale excluded under the home sale exclusion, though retirement distributions can raise MAGI. Strategies include tax loss harvesting and a 1031 exchange for real estate.
Common questions
What is the net investment income tax?
A 3.8% tax on the lesser of net investment income or MAGI above $200,000 (single) or $250,000 (joint).
Are the NIIT thresholds indexed for inflation?
No, they're fixed in law.
Does NIIT apply to IRA withdrawals?
No, though they can raise your MAGI.
Sources
More investing and trading calculators: Dollar Cost Averaging · ISO Exercise · Real Estate Investment Trust (REIT)
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General information, not financial, tax or legal advice. Check important numbers with the official source before acting on them.