Why the 3.8% NIIT Catches Investors by Surprise
The Net Investment Income Tax (NIIT) is a 3.8% surtax on investment income that applies once your Modified AGI crosses a set threshold — $200,000 for Single and Head of Household filers, $250,000 for Married Filing Jointly, and $125,000 for Married Filing Separately. Unlike ordinary tax brackets, these thresholds are not indexed for inflation, so more filers get pulled in every year. The tax applies to the smaller of your net investment income or the amount your MAGI exceeds the threshold — not your entire income or your entire investment gain.
MAGI Thresholds by Filing Status
| Filing Status | MAGI Threshold |
|---|---|
| Single / Head of Household | $200,000 |
| Married Filing Jointly | $250,000 |
| Married Filing Separately | $125,000 |
This tool gives a simplified estimate based on IRS thresholds and does not replace Form 8960 or a tax professional's advice. Actual NIIT liability can be affected by other deductions and income sources not captured here.
Frequently Asked Questions
Interest, dividends, capital gains, rental and royalty income, and non-qualified annuities, minus related investment expenses. Wages and self-employment income don't count.
Yes — $200,000 for Single/HoH, $250,000 for Married Filing Jointly, and $125,000 for Married Filing Separately.
Yes, it's a separate 3.8% surtax added on top of your regular federal tax, not a replacement.
※ This is a simplified estimate for reference only. Consult a tax professional or IRS Form 8960 instructions for your exact liability.