Net Investment Income Tax (NIIT): 3.8% Rules and Calculator
The net investment income tax (NIIT) is 3.8% of the lesser of your net investment income or the amount your modified adjusted gross income (MAGI) is over a threshold: $200,000 for single and head of household filers, $250,000 for married filing jointly and a qualifying surviving spouse, and $125,000 for married filing separately. Enter your filing status, MAGI and net investment income below to estimate the tax; the rules, what counts and what does not, and Form 8960 are explained under the calculator, with the IRS and statute text quoted.
Maintained by Archie Chang · Sources checked against IRS and statute text on November 1, 2026 · Methodology & sources
Net investment income tax calculator
Your numbers
Enter net investment income after the expenses that are properly allocable to it. Enter 0 if it is zero or a loss.
The starting numbers are the IRS example for a single filer. Replace them with yours.
Your NIIT
Net investment income tax owed
$2,660.00
An estimate for an individual. Form 8960 gives the figure that goes on the return.
- Threshold for this filing status
- $200,000.00
- MAGI over the threshold
- $70,000.00
- Net investment income
- $90,000.00
- Taxed at 3.8% (the lesser of the two)
- $70,000.00
The tax is figured on the amount MAGI is over the threshold, because that is the smaller number.
How the NIIT is figured
The IRS describes the tax this way, and the statute says:
“Effective Jan. 1, 2013, individual taxpayers are liable for a 3.8 percent Net Investment Income Tax on the lesser of their net investment income, or the amount by which their modified adjusted gross income exceeds the statutory threshold amount based on their filing status.”
“Except as provided in subsection (e)— (1) Application to individuals In the case of an individual, there is hereby imposed (in addition to any other tax imposed by this subtitle) for each taxable year a tax equal to 3.8 percent of the lesser of— (A) net investment income for such taxable year, or (B) the excess (if any) of— (i) the modified adjusted gross income for such taxable year, over (ii) the threshold amount.”
That is two steps: take the smaller of net investment income and the amount MAGI is over the threshold, then multiply by 3.8%. With the IRS example below, MAGI of $270,000 is $70,000.00 over the single threshold and net investment income is $90,000, so the tax is figured on $70,000.00 and comes to $2,660.00. If net investment income is the smaller number the tax is figured on it instead: a married couple filing jointly with MAGI of $300,000 and net investment income of $20,000 is taxed on $20,000, which is $760.00.
“Taxpayer, a single filer, has wages of $180,000 and $15,000 of dividends and capital gains. Taxpayer’s modified adjusted gross income is $195,000, which is less than the $200,000 statutory threshold. Taxpayer is not subject to the Net Investment Income Tax.”
“Taxpayer, a single filer, has $180,000 of wages. Taxpayer also received $90,000 from a passive partnership interest, which is considered Net Investment Income. Taxpayer’s modified adjusted gross income is $270,000. Taxpayer’s modified adjusted gross income exceeds the threshold of $200,000 for single taxpayers by $70,000. Taxpayer’s Net Investment Income is $90,000. The Net Investment Income Tax is based on the lesser of $70,000 (the amount that Taxpayer’s modified adjusted gross income exceeds the $200,000 threshold) or $90,000 (Taxpayer’s Net Investment Income). Taxpayer owes NIIT of $2,660 ($70,000 x 3.8%).”
The statute (26 U.S.C. 1411) is quoted from the govinfo copy, the United States Code, 2024 Edition. That edition lists section 1411 as added by Pub. L. 111-152 and shows no later amendment. The section has exceptions:
“This section shall not apply to— (1) a nonresident alien, or (2) a trust all of the unexpired interests in which are devoted to one or more of the purposes described in section 170(c)(2)(B).”
NIIT thresholds by filing status
The threshold for each filing status is the same in the statute, the IRS questions and answers and the Form 8960 instructions:
| Filing status | MAGI threshold | Source |
|---|---|---|
| Single | $200,000 | 26 U.S.C. 1411(b); Form 8960 instructions |
| Head of household | $200,000 | 26 U.S.C. 1411(b); Form 8960 instructions |
| Married filing jointly | $250,000 | 26 U.S.C. 1411(b); Form 8960 instructions |
| Qualifying surviving spouse | $250,000 | 26 U.S.C. 1411(b); Form 8960 instructions |
| Married filing separately | $125,000 | 26 U.S.C. 1411(b); Form 8960 instructions |
“(1) in the case of a taxpayer making a joint return under section 6013 or a surviving spouse (as defined in section 2(a)), $250,000, (2) in the case of a married taxpayer (as defined in section 7703) filing a separate return, ½ of the dollar amount determined under paragraph (1), and (3) in any other case, $200,000.”
“Married filing jointly or Qualifying surviving spouse is $250,000. • Married filing separately is $125,000. • Single or Head of household is $200,000.”
“Filing Status
Threshold Amount
Married filing jointly
$250,000
Married filing separately
$125,000
Single
$200,000
Head of household (with qualifying person)
$200,000
Qualifying widow(er) with dependent child
$250,000”
“Taxpayers should be aware that these threshold amounts are not indexed for inflation.”
“If you are an individual who is exempt from Medicare taxes, you still may be subject to the Net Investment Income Tax if you have Net Investment Income and also have modified adjusted gross income over the applicable thresholds.”
Whether a threshold is reached depends on MAGI, not on net investment income alone. The IRS says:
“MAGI, for purposes of the NIIT, is generally defined as AGI for regular income tax purposes increased by the foreign earned income exclusion (but also adjusted for certain deductions related to the foreign earned income). For individual taxpayers who haven't excluded any foreign earned income, their MAGI is generally the same as their regular AGI.”
A large gain raises adjusted gross income, which feeds the MAGI that SSA uses for Medicare premium tiers (IRMAA). SSA defines that MAGI differently from the NIIT MAGI above:
“Your MAGI is your adjusted gross income as used on line 11 of IRS form 1040 plus your tax-exempt interest income as used on line 2a of IRS form 1040. We used your MAGI and your tax filing status to determine your income-related monthly adjustment amount.”
That MAGI is different from the NIIT MAGI because it adds tax-exempt interest, not the foreign earned income exclusion. SSA also uses an earlier year's return. Its Form SSA-44, which you file to ask SSA to use a more recent year after a life-changing event, says:
“Note that this year must reflect a reduction in your income due to the life-changing event(s) you listed in Step 1.”
“Exception: If we used IRS information about your MAGI 3 years before the premium year, you may ask us to use information from 2 years before the premium year. For example, if we used your income tax return for 2023 to decide your 2026 IRMAA, you can ask us to use your 2024 information. • If you have any questions about what year you should use, you should call SSA.”
The 2027 IRMAA brackets are based on 2025 income, so a gain realized in 2026 would not change 2027 premiums under the standard two-year lookback, unless you ask SSA on Form SSA-44, after a life-changing event, to use a more recent year. The taxable part of Social Security benefits is another item that adds to adjusted gross income; see the taxable Social Security benefits calculator.
What counts as net investment income
The IRS says:
“In general, net investment income includes, but is not limited to: interest, dividends, capital gains, rental and royalty income, and non-qualified annuities.”
“Generally, NII includes gross income from interest, dividends, annuities, royalties, and rents, unless they’re derived from the ordinary course of a trade or business that isn’t (a) a passive activity, or (b) a trade or business of trading in financial instruments or commodities. In addition, NII includes other gross income derived from a trade or business that’s (a) a passive activity, or (b) a trade or business of trading in financial instruments or commodities. Additionally, NII includes net gain (to the extent taken into account in computing taxable income) attributable to the disposition of property other than property held in a trade or business that’s not (a) a passive activity, or (b) a trade or business of trading in financial instruments or commodities. To arrive at NII, the above items are reduced by deductions allowed against the income tax that are properly allocable to those items of gross income or net gain.”
Examples of gains the IRS gives:
“To the extent that gains are not otherwise offset by capital losses, the following gains are common examples of items taken into account in computing Net Investment Income:”
“Gains from the sale of stocks, bonds, and mutual funds.”
“Capital gain distributions from mutual funds.”
“Gain from the sale of investment real estate (including gain from the sale of a second home that is not a primary residence).”
“Gains from the sale of interests in partnerships and S corporations (to the extent the partner or shareholder was a passive owner).”
For how a capital gain is taxed before the NIIT, see the capital gains tax calculator.
What does not count as net investment income
“Wages, unemployment compensation; operating income from a nonpassive business, Social Security Benefits, alimony, tax-exempt interest, self-employment income, Alaska Permanent Fund Dividends (see Rev. Rul. 90-56, 1990-2 CB 102) and distributions from certain Qualified Plans (those described in sections 401(a), 403(a), 403(b), 408, 408A or 457(b)).”
“The Net Investment Income Tax does not apply to any amount of gain that is excluded from gross income for regular income tax purposes. The pre-existing statutory exclusion in section 121 exempts the first $250,000 ($500,000 in the case of a married couple) of gain recognized on the sale of a principal residence from gross income for regular income tax purposes and, thus, from the NIIT.”
Form 8960 and reporting
“Attach Form 8960 to your return if your modified adjusted gross income (MAGI) is greater than the applicable threshold amount.”
“Compute the tax on Form 8960, Net Investment Income Tax—Individuals, Estates, and Trusts.”
The instructions are in the Instructions for Form 8960. They also give separate rules for nonresident aliens, dual-status individuals, certain elections to file jointly with a nonresident spouse, and foreign income, which this calculator does not cover.
Estimated tax and the NIIT
The IRS NIIT page continues, after the wages and self-employment income it excludes, with Form 8960, estimated tax and the Additional Medicare Tax:
“Net investment income generally does not include wages, unemployment compensation, Social Security Benefits, alimony, and most self-employment income. Additionally, net investment income does not include any gain on the sale of a personal residence that is excluded from gross income for regular income tax purposes. To the extent the gain is excluded from gross income for regular income tax purposes, it is not subject to the Net Investment Income Tax. If an individual owes the net investment income tax, the individual must file Form 8960. Form 8960 Instructions provides details on how to figure the amount of investment income subject to the tax. If an individual has too little withholding or fails to pay enough quarterly estimated taxes to also cover the Net Investment Income Tax, the individual may be subject to an estimated tax penalty. The Net Investment Income Tax is separate from the Additional Medicare Tax, which also went into effect on January 1, 2013. You may be subject to both taxes, but not on the same type of income. The 0.9 percent Additional Medicare Tax applies to individuals’ wages, compensation, and self-employment income over certain thresholds, but it does not apply to income items included in Net Investment Income.”
“The Net Investment Income Tax is subject to the estimated tax provisions. Individuals, estates and trusts that expect to be subject to the tax in 2013 or thereafter should adjust their income tax withholding or estimated payments to account for the tax increase in order to avoid underpayment penalties.”
“No, but you may request that additional income tax be withheld from your wages.”
For the dates and rules of quarterly payments, see the IRS pages on estimated taxes; the penalty for paying too little is a separate calculation that this page does not make.
What this calculator leaves out
- It does not work out net investment income from your items: you enter the figure after the expenses properly allocable to it.
- It does not figure the tax for estates and trusts, which the IRS says use a different threshold and income measure.
- It does not apply the Form 8960 rules for nonresident aliens, dual-status individuals, controlled foreign corporations, passive foreign investment companies or elections to file jointly with a nonresident spouse.
- It does not adjust MAGI for the foreign earned income exclusion, so enter your own MAGI if that applies.
Frequently asked questions
What is the net investment income tax?
It is a 3.8% tax imposed by section 1411 of the Internal Revenue Code on the lesser of an individual’s net investment income or the amount by which modified adjusted gross income (MAGI) exceeds the threshold amount for the filing status. It is in addition to any other tax imposed by that subtitle of the Code, and the individual reports it on Form 8960.
What are the NIIT income thresholds?
The thresholds are $250,000 for married filing jointly or a qualifying surviving spouse, $125,000 for married filing separately, and $200,000 for single or head of household. The IRS says these threshold amounts are not indexed for inflation, and the statute sets them as fixed dollar amounts.
How do I figure the NIIT?
Take the smaller of two numbers: your net investment income, or your MAGI minus the threshold for your filing status (zero if MAGI is at or below the threshold). Multiply by 3.8%. In the IRS example, a single filer with MAGI of $270,000 and net investment income of $90,000 owes NIIT of $2,660, which is $70,000 x 3.8%. Another IRS example, with MAGI of $195,000 for a single filer, owes none because MAGI is under $200,000.
What counts as net investment income?
The IRS says it includes, but is not limited to, interest, dividends, capital gains, rental and royalty income, and non-qualified annuities, and income from businesses that are passive activities or that trade financial instruments or commodities. Net gain from selling property counts to the extent it is taken into account in computing taxable income. Investment expenses properly allocable to that income reduce it.
What is not net investment income?
The IRS lists wages, unemployment compensation, operating income from a nonpassive business, Social Security benefits, alimony, tax-exempt interest, self-employment income, Alaska Permanent Fund Dividends, and distributions from certain qualified plans (those described in sections 401(a), 403(a), 403(b), 408, 408A or 457(b)) as common types of income that are not net investment income. The IRS page says net investment income generally does not include wages, unemployment compensation, Social Security benefits, alimony and most self-employment income.
Does the NIIT apply to gain on the sale of my home?
The IRS says the NIIT does not apply to any amount of gain that is excluded from gross income for regular income tax purposes. The section 121 exclusion covers the first $250,000 ($500,000 for a married couple) of gain on a principal residence. Gain above the exclusion that is recognized can count as net investment income, as in the IRS examples on its questions and answers page.
Do I need to make estimated tax payments for the NIIT?
The IRS says the NIIT is subject to the estimated tax provisions, and that you may be subject to an estimated tax penalty if your withholding is too low or your quarterly estimated payments do not also cover it. The IRS also says the tax does not have to be withheld from wages, but you may request that additional income tax be withheld.
Is the NIIT the same as the Additional Medicare Tax?
No. The IRS says the two taxes are separate and you may be subject to both, but not on the same type of income. The 0.9% Additional Medicare Tax applies to wages, compensation and self-employment income over certain thresholds, and it does not apply to income items included in net investment income.
Related tax tools
See the capital gains tax calculator, the IRMAA brackets and the taxable Social Security benefits calculator. The IRS’s own pages: Net Investment Income Tax, questions and answers and Topic 559.
Sources
Sources (checked November 1, 2026): IRS: Net Investment Income Tax · IRS: Questions and Answers on the Net Investment Income Tax · IRS: Topic no. 559, Net investment income tax · IRS: Instructions for Form 8960 (2025) · SSA: Form SSA-44 instructions (income-related monthly adjustment amount) · 26 U.S.C. 1411: imposition of tax (govinfo, United States Code, 2024 Edition) · 26 U.S.C. 1411: imposition of tax (govinfo, United States Code, 2024 Edition) (Cornell LII copy)