Net Investment Income Tax (NIIT) Calculator
Calculate the 3.8% Net Investment Income Tax that applies to investment income for high-income individuals.
Calculate NIIT
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Net Investment Income
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How It Works
The Net Investment Income Tax is a 3.8% surtax on investment income for taxpayers with modified AGI above certain thresholds.
NIIT Thresholds
| Filing Status | Threshold |
|---|---|
| Single | $200,000 |
| Married Filing Jointly | $250,000 |
| Married Filing Separately | $125,000 |
| Head of Household | $200,000 |
Formula
NIIT = 3.8% × min(Net Investment Income, MAGI - Threshold)
What Counts as Net Investment Income?
- Interest, dividends, capital gains
- Rental and royalty income
- Passive business income
- NOT wages, self-employment income, or active business income
Examples
Example: Single, $300k MAGI, $50k NII
Over threshold: $300k - $200k = $100k
Subject to NIIT: min($50k, $100k) = $50k
NIIT: $50,000 ×
3.8% = $1,900
Frequently Asked Questions
Is NIIT the same as Additional Medicare Tax?
No. NIIT (3.8%) applies to investment income. Additional Medicare
Tax (0.9%) applies to wages and self-employment income. Different income types, different
taxes.
Does NIIT apply to my 401k distributions?
Generally no. Distributions from qualified retirement accounts like
401k and IRA are not net investment income. They are taxed as ordinary income.
What about rental income?
Passive rental income is generally subject to NIIT. However, if
you're a real estate professional materially participating, it may not be.
Can I reduce NIIT?
Strategies include: tax-loss harvesting to reduce capital gains,
municipal bonds (tax-exempt interest), and maximizing deductions to lower MAGI.
Are the thresholds adjusted for inflation?
No. The NIIT thresholds ($200k/$250k/$125k) have remained the same
since the tax was enacted in 2013. They are not indexed for inflation.
How is NIIT paid?
Report NIIT on Form 8960 and pay with your annual return. It may
need to be included in estimated tax payments to avoid underpayment penalties.