Net Investment Income Tax Calculator
Calculate your 3.8% NIIT surtax, see what income counts as NII, and get personalized strategies to reduce it. For $280K MFJ with $60K NII, NIIT = $1,140. 2026 rules.
How to Use This Calculator
NIIT Calculation tab
Enter your MAGI (Modified Adjusted Gross Income) and filing status, then break down your investment income by type: interest, dividends, capital gains, passive rental income, and royalties. The calculator shows your total NII, your NIIT threshold, how much your MAGI exceeds it, and your exact NIIT bill using the IRS lesser-of formula.
What Counts as NII? tab
An interactive checklist of every income type with a clear included/excluded verdict. Useful before filing Form 8960 or doing year-end tax planning. Note the critical distinction between passive and active income from partnerships, S-corps, and rental properties.
Reduce NIIT tab
Based on your inputs, the calculator surfaces the strategies most relevant to your situation — from retirement contribution optimization to municipal bonds to Roth conversions. Update your numbers in Tab 1 to see how each strategy changes your NIIT exposure.
Share your result
Every input is encoded in the URL. Click Share to send your exact scenario to a spouse, financial advisor, or CPA.
The NIIT Formula (IRC Section 1411)
The Net Investment Income Tax is calculated in two steps:
NII = Interest + Dividends + Net Capital Gains
+ Passive Rental + Royalties + Annuities
Step 2: Apply the lesser-of rule
NIIT = 3.8% × min(NII, MAGI − Threshold)
Thresholds (NOT inflation-adjusted since 2013):
Single / Head of Household: $200,000
Married Filing Jointly: $250,000
Married Filing Separately: $125,000
Why the lesser-of rule matters: If your excess MAGI is smaller than your NII, you only pay NIIT on the excess — not on all of your NII. Conversely, if your NII is smaller than your excess MAGI, you only pay NIIT on your actual NII. The NIIT is reported on Form 8960 and attached to your Form 1040.
Worked Example: The Chen Family
David (52) & Lisa (49), Austin TX. David earns $210,000 as a software engineer. Lisa has a $70,000 consulting income. They have a $1.2M taxable brokerage account generating investment income. Filing MFJ.
Their investment income:
| Income Type | Amount | Counts as NII? |
|---|---|---|
| Interest (CDs, savings) | $8,000 | Yes |
| Qualified dividends (index funds) | $15,000 | Yes |
| Long-term capital gains (stock sale) | $40,000 | Yes |
| Wages (David + Lisa) | $280,000 | No |
| Total MAGI | $343,000 |
NIIT Calculation (MFJ threshold: $250,000):
Excess MAGI = $343,000 − $250,000 = $93,000
Lesser of = min($63,000, $93,000) = $63,000
NIIT = 3.8% × $63,000 = $2,394
What they could do differently: If David maxes his 401(k) at $23,500 plus a mega backdoor Roth of $46,500 (total $70,000), MAGI drops to $273,000. Excess over threshold: $23,000. NIIT = 3.8% × min($63,000, $23,000) = $874 — a savings of $1,520 in NIIT alone, plus lower ordinary income tax.
If they also harvested $20,000 in losses: Net capital gains drop to $20,000. Total NII = $43,000. NIIT = 3.8% × min($43,000, $23,000) = $874 (same result because excess MAGI is the binding constraint). But if they can also reduce MAGI by another $23,001 — NIIT drops to $0.
2026 NIIT Thresholds
The NIIT applies only above these income levels. Critically, these thresholds have not been adjusted for inflation since 2013 when the ACA introduced the tax. In 2013, the $250,000 MFJ threshold was roughly the 90th income percentile. By 2026 it is closer to the 80th percentile — and falling every year without any legislation change.
| Filing Status | MAGI Threshold | Real Value (2013 dollars) |
|---|---|---|
| Single / Head of Household | $200,000 | ~$145,000 |
| Married Filing Jointly | $250,000 | ~$181,000 |
| Married Filing Separately | $125,000 | ~$91,000 |
OBBBA 2025 impact: The One Big Beautiful Budget Act made no changes to the NIIT rate, thresholds, or NII definition. The 3.8% surtax remains fully in effect for 2026.
How NIIT Stacks with Other Taxes
The NIIT does not replace your regular income tax or capital gains tax — it stacks on top of them. Here is what a high-income investor might pay on the same investment income in 2026:
| Income Type | Fed Rate | NIIT | Combined (no state) |
|---|---|---|---|
| Short-term capital gains (37% bracket) | 37% | 3.8% | 40.8% |
| Long-term capital gains (20% bracket) | 20% | 3.8% | 23.8% |
| Qualified dividends (20% bracket) | 20% | 3.8% | 23.8% |
| Ordinary interest (37% bracket) | 37% | 3.8% | 40.8% |
| Municipal bond interest | 0% | 0% | 0% |
The California problem: Add California’s 13.3% top rate, and a high-income CA resident pays up to 54.1% on short-term gains (37% + 3.8% + 13.3%). This is why high-income Californians are particularly aggressive about NIIT planning and tax-loss harvesting.
Frequently Asked Questions
The NIIT is a 3.8% surtax on investment income created by the Affordable Care Act in 2013 (IRC Section 1411). It applies to taxpayers whose Modified Adjusted Gross Income exceeds $200,000 (single) or $250,000 (MFJ). The tax is 3.8% of the lesser of your net investment income or the amount your MAGI exceeds the threshold. It stacks on top of your regular income tax and capital gains tax — it is not a replacement.
It depends on whether you materially participate. Passive rental income (where you don’t meet IRS material participation tests) IS subject to NIIT. If you are a real estate professional under IRC 469 (750+ hours per year in real property trades, more than half your work time), your rental income may be treated as active and excluded from NII. Most landlords with regular day jobs will have passive rental income subject to NIIT.
No. Distributions from traditional IRAs, Roth IRAs, 401(k)s, and other qualified retirement plans are not net investment income and are never subject to the NIIT. However, they do count toward your MAGI, which can push more of your other investment income over the threshold. This is an important consideration when planning Roth conversions — conversions increase MAGI and could trigger or increase NIIT on your other investment income.
The NIIT is calculated on Form 8960 (Net Investment Income Tax — Individuals, Estates, and Trusts) and the amount flows to Schedule 2 of Form 1040. If you expect to owe NIIT, you should include it in your quarterly estimated tax payments (Form 1040-ES) to avoid the underpayment penalty. Your tax software will handle Form 8960 automatically once you enter your investment income.
It can. When you sell your primary home, the first $250,000 ($500,000 MFJ) of gain is excluded from income tax under the Section 121 exclusion — and that excluded amount is also excluded from NII. However, any gain above the exclusion amount is NII and subject to NIIT if your MAGI exceeds the threshold. For a primary home sale producing $600,000 gain for a MFJ couple, $500,000 is excluded; the remaining $100,000 is NII potentially subject to 3.8% NIIT = $3,800.
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