Net Investment Income Tax (NIIT) Calculator
This calculator computes your 2025 Net Investment Income Tax (NIIT), a 3.8% surtax on net investment income under IRC Section 1411. Enter your modified adjusted gross income (MAGI) and breakdown of net investment income: interest, dividends, capital gains (short-term and long-term), rental income, and other passive income. The NIIT is assessed on the lesser of your total net investment income or the amount by which your MAGI exceeds a filing-status threshold. These thresholds are fixed at 200,000 (single, head of household), 250,000 (married filing jointly), and 125,000 (married filing separately) and are not indexed for inflation (unlike most other tax thresholds). The calculator shows the excess MAGI, the taxable net investment income, and your NIIT liability. The tax was enacted as part of the Affordable Care Act and took effect in 2013. It affects high-income investors and can combine with capital gains tax rates to create a top federal rate of 23.8% on long-term capital gains (20% plus 3.8% NIIT) before state taxes. Important for business owners, rental-property investors, and retirees with significant investment portfolios.
With MAGI of $275,000 and net investment income of $40,000, filing as single: NIIT owed is -- (3.8% on the lesser of NII or excess MAGI over the $200,000 threshold).
How the NIIT is calculated
The NIIT is 3.8% of the lesser of: (1) your net investment income, or (2) the amount by which your MAGI exceeds the threshold for your filing status. This is the formula prescribed by IRC Section 1411 and computed on IRS Form 8960.
NII = interest + dividends + capital gains + rental income + other NII
excess = max(0, MAGI - threshold)
NIIT base = min(NII, excess)
NIIT = NIIT base x 3.8%
2025 NIIT thresholds (NOT inflation-adjusted)
The NIIT thresholds are not adjusted for inflation. They have been $200,000/$250,000 since the tax took effect in 2013. Source: IRC Section 1411.
| Filing status | NIIT threshold |
|---|---|
| Single | $200,000 |
| Married filing jointly / Surviving spouse | $250,000 |
| Married filing separately | $125,000 |
| Head of household | $200,000 |
Worked example
Single filer, MAGI $275,000, NII = $5,000 interest + $8,000 dividends + $15,000 capital gains + $12,000 rental = $40,000:
- Excess MAGI = $275,000 - $200,000 = $75,000
- NIIT base = min($40,000, $75,000) = $40,000
- NIIT = $40,000 x 3.8% = $1,520
What income is included in net investment income?
The IRS provides a detailed breakdown in its Questions and Answers on the Net Investment Income Tax. Items included are taxable interest, ordinary and qualified dividends, capital gains (both short and long-term), rental income from passive activities, royalties, passive income from partnerships and S corporations, and income from a business of trading in financial instruments.
Items excluded are wages and salary, self-employment income, active business income, Social Security benefits, unemployment compensation, tax-exempt interest (such as from municipal bonds), alimony received, and distributions from IRAs, 401(k)s, 403(b)s, and other qualified retirement plans. Non-qualified annuity distributions are generally included; qualified annuity distributions from retirement plans are excluded.
Planning considerations
Because the NIIT applies to the lesser of NII or excess MAGI, taxpayers near the threshold have two levers: reduce investment income (for example, by harvesting capital losses to offset gains) or reduce MAGI (for example, by maximising pre-tax retirement plan contributions, which lower AGI). Municipal bond interest is excluded from both MAGI and NII, though its after-tax yield advantage must be weighed against its typically lower coupon. Tax-loss harvesting, qualified opportunity zone investments, and Roth conversions in low-income years are other strategies sometimes discussed with a tax adviser.
NIIT calculator: frequently asked questions
What is the Net Investment Income Tax?
The Net Investment Income Tax is a 3.8% surtax imposed by IRC Section 1411 on the lesser of a taxpayer's net investment income or the amount by which their modified adjusted gross income (MAGI) exceeds a filing-status threshold. It was enacted as part of the Affordable Care Act and took effect in 2013. It applies to individuals, estates, and trusts above the applicable thresholds.
What income is included in net investment income?
Net investment income generally includes interest, dividends, capital gains (short-term and long-term), rental and royalty income, passive activity income, and income from a trade or business that is a passive activity or trades in financial instruments. It does not include wages, self-employment income, active business income, Social Security benefits, alimony, IRA or qualified retirement plan distributions, or tax-exempt interest.
Does the NIIT apply to IRA or 401(k) withdrawals?
No. Distributions from traditional IRAs, Roth IRAs, 401(k) plans, and other qualified retirement plans are excluded from net investment income. However, these distributions can increase your MAGI, potentially pushing more of your other investment income over the NIIT threshold. Source: IRS Questions and Answers on the Net Investment Income Tax.
What is MAGI for NIIT purposes?
For NIIT purposes, MAGI is generally your adjusted gross income (AGI) modified by adding back certain foreign income exclusions. For most taxpayers, MAGI equals their AGI from Form 1040. The IRS explains the precise computation on Form 8960 and in the instructions to that form.
Do the NIIT thresholds adjust for inflation?
No. Unlike most other tax thresholds, the NIIT thresholds are not indexed for inflation. IRC Section 1411(b)(1) sets them at $200,000 (single/HOH), $250,000 (MFJ), and $125,000 (MFS). They have remained at these levels since 2013. This is confirmed by IRS Questions and Answers on the Net Investment Income Tax.
How does the NIIT interact with capital gains tax?
Long-term capital gains may be subject to both the preferential capital gains rate (0%, 15%, or 20%) and the 3.8% NIIT surtax if MAGI exceeds the threshold. This means the top effective federal rate on long-term capital gains for high earners is 20% + 3.8% = 23.8%, before any applicable state tax. Short-term capital gains are taxed as ordinary income and, if MAGI exceeds the threshold, are also subject to the 3.8% NIIT.
Official sources
- Statutory authority: IRC Section 1411, U.S. Government Publishing Office.
- IRS guidance: IRS Questions and Answers on the Net Investment Income Tax.
- NIIT reporting form: IRS Form 8960, Net Investment Income Tax.
Reviewed by the CalculatorHub team, edited by James Graham, 13 June 2026. See our methodology. General information only, not tax advice.