Net Investment Income Tax (NIIT)
An additional 3.8% tax on investment income for high earners. Applies to interest, dividends, capital gains, and rental income.
Full explanation
The Net Investment Income Tax (NIIT) is a 3.8% surtax on the lesser of: (1) net investment income, or (2) the amount by which your MAGI exceeds $200,000 (single) or $250,000 (married filing jointly). These thresholds are NOT inflation-adjusted. Net investment income includes: interest, dividends, capital gains, rental income, royalties, and passive business income. It does NOT include wages, self-employment income, Social Security, or distributions from qualified retirement plans. Report on Form 8960. Combined with the top 20% long-term capital gains rate, high earners effectively pay 23.8% on investment income.
Source: IRS Form 8960 — Net Investment Income Tax
Ask the AI about this
“How does net investment income taxaffect my taxes?”Tax education only. Source: IRS Form 8960 — Net Investment Income Tax.