Calculator
Net Investment Income Tax (NIIT) Calculator
Net Investment Income Tax (NIIT) Calculator
Wages, self-employment income, taxable pensions, Social Security.
Interest, dividends, capital gains, rents — net of expenses.
The NIIT applies only when MAGI exceeds $250,000 (Married Filing Jointly) , and only to the smaller of your investment income or the amount over that line. Tax-exempt municipal bond interest is excluded.
Estimated NIIT Owed
$0
NIIT Analysis
Your modified adjusted gross income of $210,000 is $40,000 below the Married Filing Jointly threshold of $250,000, so no NIIT is owed this year. If investment income grows or you realize big capital gains, re-check — the surtax only applies to income above the line.
*Estimates federal NIIT only based on simplified inputs. Actual NIIT depends on precise MAGI, deduction allocation, and Form 8960 computations. Educational only, not tax advice.
The 3.8% Surcharge on Investment Income
The Net Investment Income Tax is a 3.8% federal surtax that has quietly applied to wealthy households since 2013. It lands on investment income — interest, dividends, capital gains, rental income, annuity payouts, and passive business income — once your modified adjusted gross income crosses $200,000 for single filers or $250,000 for married couples. Originally framed as a health-care funding measure for high earners, it is now a permanent fixture of federal tax planning for anyone with a substantial taxable portfolio or rental activity. For US investors the NIIT is best understood as a silent rate hike layered on top of the rates you already know. Long-term capital gains nominally top out at 20%, add the NIIT and the true ceiling is 23.8%. Ordinary dividends approach the top rate plus the surcharge. And because the tax keys off MAGI, realizing one large capital gain can drag other investment income into the surcharge zone for that year — which is why tax-aware investors watch their MAGI the way drivers watch a speedometer approaching a speed trap.
The Smaller of Two Numbers
The NIIT computation rests on one elegant rule: the surtax applies to the lesser of (1) your net investment income, or (2) the amount by which MAGI exceeds the filing-status threshold. First the tool adds your other income plus your investment income to get MAGI, then subtracts the threshold ($200k/$250k/$125k by filing status) to get the excess. If the excess is zero, the NIIT is zero regardless of how much investment income you earned. Otherwise, 3.8% applies to whichever limit is smaller. A retiree with $40,000 of dividends and $60,000 of MAGI over the line pays only on the $40,000; a seller who realizes a $300,000 gain with MAGI only $100,000 over the line pays on the $100,000 excess. The tool reports both numbers so you can see which one is binding — that distinction drives every real planning move, from loss harvesting to charitable donations of appreciated stock. Remember that the net investment income tax never applies to wages or self-employment income, which remain subject to ordinary income and payroll taxation under the usual brackets.
Expert Insights
NIIT Turns 15% Gains Into 18.8% and 20% Into 23.8%
Long-term gains feel cheap at 0/15/20% until the surcharge is added: any portion above the threshold costs 3.8% more. A couple selling $90,000 of appreciated stock while already $100,000 over their threshold pays an extra $3,420 — the equivalent of losing one more year of compounding to tax.
Watch MAGI, Not Just Income
NIIT uses MAGI — which can include excluded foreign income and other adjustments — so a conversion, a Roth ladder gone wrong, or a year-end mutual fund distribution can push you over the line late in the year. Re-check your MAGI estimate in November; stopping a gain realization can save the full 3.8% on everything above the threshold.
Some Investment Income Is Invisible to NIIT
Municipal bond interest, qualified retirement account distributions (until withdrawn), and active S-corp income escape the surcharge. Taxable accounts carrying munis instead of corporate bonds, or appreciated securities donated to charity instead of sold, are standard ways advisors shrink the NIIT base.
Actionable Tips
- 1
Project Your MAGI Before Realizing Gains
Before selling appreciated assets, estimate MAGI with this tool in two versions — with and without the gain. If the gain pushes you over the threshold, consider spreading the sale across two tax years or harvesting losses simultaneously to hold the NIIT base down.
- 2
Use Tax-Advantaged Accounts for High-Yield Assets
REIT dividends, bond interest, and high-turnover trading income all generate NIIT in taxable accounts but none inside an IRA or 401(k). Siting the income-heavy assets in tax-sheltered accounts and growth stocks in taxable ones is the classic NIIT-aware placement.
- 3
Re-Check at Year-End for Mutual Fund Distributions
Mutual funds can hand you capital gains distributions in December you did not choose. If those distributions would trigger NIIT for you, offset them with harvested losses before year-end rather than paying the 3.8% on money you never touched.
Real-World Examples
The Couple Who Split the Sale
Priya and Mark needed $200,000 from a stock sale and had $180,000 of wages. Selling all of it would push $130,000 of gains above their $250,000 threshold and trigger roughly $4,940 of NIIT on top of everything else. They sold half in December and half in January instead — the second year's threshold absorbed most of the remainder, and the calculator confirmed the two-year path cut the surcharge to under $1,200.
The Rental Income Surprise
Ellen retired with two rental properties producing $65,000 of net rental income a year, plus a $55,000 pension. She assumed rentals were 'business' income and exempt. When the CPA showed her the passive-activity classification — and this tool's $2,470 annual bill — she restructured: her daughter became a real professional participant, and the activity moved below the surcharge radar.
The Charity Swap That Beat the Surtax
Harold was about to sell $80,000 of low-basis stock to fund a major gift, which at his MAGI level would have cost 23.8% federal plus the 3.8% NIIT in tax. Instead he donated the shares directly to the charity, skipping $30,400 of income he would have reported — and claimed a deduction on the full market value. The NIIT calculator showed what the sale-and-donate path would have cost: about $3,040 of surcharge alone.
Glossary of Terms
- Modified Adjusted Gross Income (MAGI)
- AGI with certain exclusions (like foreign-earned income) added back — the measure used to test whether the 3.8% NIIT applies at all.
- Net Investment Income
- Investment earnings — interest, dividends, capital gains, rents, passive income — net of related expenses, and the ceiling on how much can be hit by the surtax.
- Lesser-Of Rule
- NIIT applies to the smaller of your investment income or your MAGI above the threshold — a key that makes every planning move focus on the binding side.
Frequently Asked Questions
Everything you need to know about this topic.
Ivy Sinclair-Wren
Financial Chaos Analyst
Ivy Sinclair-Wren is a Financial Chaos Analyst covering investing, AI, wealth psychology, and the emotional consequences of opening finance apps during market crashes. Based in Melbourne, she specializes in demystifying the US tax code and helping users navigate the intersection of spreadsheet logic and human irrationality.