NIIT Calculator (3.8% Net Investment Income Tax)
The Net Investment Income Tax is an additional 3.8% tax on investment income when your MAGI exceeds $200,000 (single) or $250,000 (married filing jointly). These thresholds are not indexed for inflation — so more people hit them every year.
How the Net Investment Income Tax Works
The formula. NIIT = 3.8% × the lesser of: (a) your net investment income, or (b) the amount by which your MAGI exceeds the threshold. This means both conditions must be met — you need MAGI above the threshold and investment income.
What counts as net investment income? Interest, dividends, capital gains, rental income, royalties, non-qualified annuities, and passive business income. Notably excluded: wages, self-employment income, Social Security, tax-exempt interest, distributions from retirement accounts, and income from active business participation.
Thresholds (IRC §1411). $200,000 for single/HOH, $250,000 for MFJ, and $125,000 for married filing separately. These are statutory amounts from 2013 — they are not adjusted for inflation. In 2026, these thresholds capture significantly more taxpayers than when the tax was enacted.
NIIT and capital gains interact. A large capital gain in a single year (like selling a business, a rental property, or concentrated stock) can push you well above the NIIT threshold, adding 3.8% on top of the 15% or 20% capital gains rate. The combined top rate on long-term gains can reach 23.8% federal (20% + 3.8%).
Planning strategies. Harvesting gains across multiple years, managing Roth conversions to avoid threshold spikes, timing rental income recognition, and using installment sales to spread gains can all help manage NIIT exposure.