NIIT applies to the smaller of two figures, not simply 3.8% of all investment income.
How it works
The tax applies to 3.8% of the lesser of net investment income, or the amount by which MAGI exceeds the filing-status threshold ($200,000 single/head of household, $250,000 married filing jointly, $125,000 married filing separately). These thresholds are not indexed for inflation, per the IRS source.
What this does not include
This doesn’t determine what counts as “net investment income” itself — dividends, interest, capital gains, and certain passive income generally qualify, but the specific categorization can be complex and isn’t computed here.
How to use this calculator
- Enter MAGI, net investment income, and select your filing status threshold.
Frequently asked questions
Why is it the “lesser of” two figures?
Because the tax is meant to apply only to investment income actually earned above the threshold — capping it at net investment income prevents taxing more than was actually earned from investments.
Are the thresholds adjusted for inflation?
No — per the IRS source, they’re fixed by statute and not indexed, meaning more taxpayers become subject to NIIT over time as incomes rise with inflation.
Does NIIT apply below the threshold?
No — if MAGI is at or below the threshold, no NIIT applies regardless of how much investment income was earned.
