US Net Investment Income Tax (NIIT) Calculator

The NIIT is a 3.8% tax on investment income that applies to higher-income individuals, estates and trusts. It was introduced under the Affordable Care Act and is reported on IRS Form 8960. For individuals, it hits the smaller of your net investment income or the amount your modified adjusted gross income (MAGI) exceeds a fixed threshold.

The MAGI thresholds are $250,000 for married filing jointly (and qualifying surviving spouse), $200,000 for single and head of household, and $125,000 for married filing separately. These figures are set by statute and are not adjusted for inflation, so they have stayed the same since the tax began in 2013.

You pay 3.8% of the lesser of two numbers: (a) your net investment income, or (b) the amount by which your MAGI exceeds your filing-status threshold. So if your MAGI is only slightly over the threshold, the tax is based on that small excess, even if your investment income is large — and vice versa.

Net investment income generally includes taxable interest, dividends, capital gains, rental and royalty income, non-qualified annuity income, and income from businesses that are passive to you or that trade financial instruments/commodities. You then subtract allowable investment expenses (such as investment interest and certain fees) to reach the 'net' figure.

Wages and self-employment income, active trade or business income, Social Security benefits, tax-exempt municipal bond interest, distributions from qualified retirement plans (401(k), IRA, 403(b)), and gains on the sale of an active interest in a partnership or S-corp are generally excluded. Wages and self-employment income can instead face the 0.9% Additional Medicare Tax.

For NIIT purposes, MAGI is your adjusted gross income (AGI) increased by any foreign earned income exclusion you claimed (net of related deductions). If you did not exclude foreign earned income, your MAGI is simply your AGI. Enter that figure in the MAGI box.

Yes. If you have a long-term capital gain, you first pay the 0%, 15% or 20% capital gains rate, and the 3.8% NIIT can then apply on top of that to the same gain if your MAGI is over the threshold. Combined, a high earner's long-term gain can be taxed at up to 23.8% federally.

No — they are separate. The 3.8% NIIT applies to investment income, while the 0.9% Additional Medicare Tax applies to wages and self-employment income above similar thresholds. A high earner can owe both, but the same dollar of income is never hit by both taxes.

Only on the excess. If you are single with $210,000 MAGI and $50,000 of investment income, the tax is 3.8% of the lesser of $50,000 or the $10,000 you are over the $200,000 threshold — so 3.8% of $10,000 = $380, not 3.8% of $50,000.

Common strategies include keeping MAGI below the threshold, harvesting capital losses, holding investments in tax-advantaged accounts (IRAs, 401(k)s), using municipal bonds whose interest is exempt, spreading gains across tax years, and — for business owners — materially participating so income is active rather than passive. A quick planning review often pays for itself.

Usually yes. Rental income is generally treated as passive investment income subject to the NIIT. An exception can apply if you qualify as a real estate professional and the rental rises to the level of an active trade or business, in which case it may be excluded — a fact-specific test worth checking.

Only the taxable portion of the gain counts. The main-home exclusion ($250,000 single / $500,000 married) removes gain from both income tax and the NIIT. If your gain exceeds the exclusion, the excess is investment income and can be subject to the 3.8% tax if your MAGI is over the threshold.

Yes, but at a much lower threshold. For 2025, estates and trusts pay the 3.8% tax on the lesser of undistributed net investment income or the amount their AGI exceeds the top trust income-tax bracket start (around $15,650). This calculator is built for individuals; trusts should use Form 8960 with the trust threshold.

No. Unlike tax brackets, the $200,000 / $250,000 / $125,000 NIIT thresholds are fixed in the statute and have never been increased. Because of inflation, more taxpayers fall within the NIIT every year — a form of 'bracket creep' that makes the tax increasingly common.

Individuals report the NIIT on Form 8960, 'Net Investment Income Tax — Individuals, Estates, and Trusts', which is filed with your Form 1040. The total flows to Schedule 2 and then onto your 1040. This calculator estimates the figure that would appear on that form.

Distributions from qualified retirement accounts (traditional IRA, Roth IRA, 401(k), 403(b)) are not themselves net investment income, so they are not directly subject to the NIIT. However, a large distribution or Roth conversion raises your MAGI, which can push more of your OTHER investment income into the 3.8% tax.

Yes. Net capital losses reduce your net investment income for the NIIT, and up to $3,000 of net losses can offset other income each year, with the rest carried forward. Deliberate loss harvesting can therefore cut both your capital gains tax and your NIIT in the same year.

Potentially yes. As a US citizen you are taxed on worldwide income regardless of residence, and the NIIT can apply to your investment income. Importantly, the IRS's position is that UK tax generally cannot be used as a foreign tax credit against the NIIT, so it can create genuine double taxation — a key issue for Americans abroad to plan around.

Generally no. The IRS treats the NIIT as outside the foreign tax credit rules, so foreign income taxes you pay usually cannot reduce your NIIT liability. This is why US persons in high-tax countries like the UK can end up paying the 3.8% even after crediting foreign tax against their regular US tax — cross-border advice matters here.

It applies the official 3.8% rate and the fixed 2025 MAGI thresholds to the 'lesser of' rule exactly as Form 8960 does, so it is accurate for a straightforward individual calculation. It does not compute your net investment income for you (enter that figure) or handle estate/trust thresholds and special adjustments.

No — the calculation runs entirely in your browser and nothing is stored unless you choose to download the branded PDF report, at which point you provide your name and email so we can send it. Phone and address are optional.

Yes. Enter your name and email (phone and address optional) and we generate a TaxStone-branded PDF of your NIIT breakdown to download instantly — handy for tax planning or sharing with your CPA or Enrolled Agent.

If you are near or over the threshold — especially with rental property, a business sale, large gains, or a US/UK cross-border situation — a short review can uncover ways to legitimately reduce the 3.8% charge. Book a free 20-minute call with a TaxStone Enrolled Agent.