Net Investment Income Tax (NIIT) Calculator
Calculate the 3.8% Net Investment Income Tax on income above IRS thresholds.
For high earners with dividends, capital gains, rental income, or passive income.
Net Investment Income Tax (NIIT)
The NIIT is an additional 3.8% tax on net investment income that applies to higher-income taxpayers. It was created by the Affordable Care Act and took effect in 2013. It is sometimes called the Medicare surtax.
Formula:
NIIT = 3.8% × min(NII, max(0, MAGI - Threshold))
You pay 3.8% on whichever is smaller: your net investment income, or the amount your MAGI exceeds the threshold.
2024 Income Thresholds:
| Filing Status | MAGI Threshold |
|---|---|
| Single | $200,000 |
| Married Filing Jointly | $250,000 |
| Married Filing Separately | $125,000 |
| Head of Household | $200,000 |
What counts as Net Investment Income (NII):
- Interest income
- Dividends (qualified and ordinary)
- Capital gains (short-term and long-term)
- Rental and royalty income
- Passive business income
- Annuity income (non-retirement)
What is excluded from NII:
- Wages and self-employment income
- Social Security benefits
- IRA and 401(k) distributions
- Active business income
- Municipal bond interest (already exempt from federal income tax)
MAGI for NIIT purposes: MAGI = Adjusted Gross Income + foreign earned income exclusion (if any). For most taxpayers, MAGI equals AGI.
Example:
- Single taxpayer, MAGI = $250,000
- NII = $40,000 (dividends + capital gains)
- Amount over threshold: $250,000 - $200,000 = $50,000
- NIIT = 3.8% × min($40,000, $50,000) = 3.8% × $40,000 = $1,520
Planning strategies:
- Invest in tax-deferred accounts to keep investment income out of NII
- Municipal bonds produce interest excluded from NII
- Manage timing of capital gains to stay under threshold