Net Investment Income Tax (NIIT)


In addition to federal and state capital gains taxes, high-income taxpayers may be subject to an additional surtax of 3.8% on their net investment income if their modified adjusted gross income (MAGI) exceeds certain thresholds. Net investment income includes items like interest, dividends, short and long-term capital gains, business activities that are treated as passive income, and rental income from investment property.


The net investment income tax applies to investors who have MAGI over the following thresholds:

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.”