Net Investment Income Tax Calculator: The 3.8% NIIT
Work out the Net Investment Income Tax (NIIT) — the 3.8% surtax on investment income for higher earners, on top of regular income tax and capital gains tax.
Adjust the inputs and select Calculate for a full breakdown.
Compare Common Scenarios
How the numbers shift across typical situations for this calculator:
| Scenario | Net investment income tax | Investment income net of NIIT |
|---|---|---|
| 3.8% of $50,000 | 1,900 | 48,100 |
| 3.8% of $20,000 | 760 | 19,240 |
| 3.8% of $200,000 (large gain) | 7,600 | 192,400 |
| 3.8% of $10,000 (just over threshold) | 380 | 9,620 |
How This Calculator Works
Enter the NIIT rate (a fixed 3.8%) and the investment income subject to it (the lesser of net investment income or MAGI above the threshold). The calculator gives the NIIT owed and the income net of it. The thresholds — $200k single, $250k married filing jointly — are not inflation-indexed, so more taxpayers cross them each year.
The Formula
Percentage of an Amount
Amount is the base value, Percentage is the rate applied to it
Worked Example
$50,000 of investment income subject to NIIT incurs $1,900 of Net Investment Income Tax — on top of the income or capital gains tax already owed. For a high earner selling appreciated stock, the combined federal rate can reach 23.8% (20% long-term capital gains + 3.8% NIIT) before state tax. The NIIT is the reason '20% capital gains' often becomes 23.8% in practice for high-income investors.
Key Insight
The NIIT is the hidden surcharge that turns the headline 20% long-term capital gains rate into an effective 23.8% for high earners. Because its thresholds ($200k/$250k) were never inflation-indexed when enacted in 2013, bracket creep pulls more taxpayers into NIIT every year. Planning levers: tax-loss harvesting, holding investments in tax-advantaged accounts (NIIT doesn't apply inside 401(k)/IRA/HSA), spreading large gains across tax years, and managing MAGI below the threshold where possible.
Frequently Asked Questions
What is the Net Investment Income Tax?
A 3.8% federal surtax on net investment income for taxpayers with modified adjusted gross income (MAGI) above $200,000 (single) or $250,000 (married filing jointly). Enacted in 2013 to help fund the ACA. It's on top of regular income and capital gains tax.
What counts as net investment income?
Interest, dividends, capital gains, rental and royalty income, non-qualified annuities, and income from passive businesses. It excludes wages, active business income, Social Security, tax-exempt municipal bond interest, and distributions from qualified retirement accounts.
How is the NIIT base calculated?
The 3.8% applies to the LESSER of (a) net investment income, or (b) MAGI above the threshold. So a taxpayer just over the threshold pays NIIT only on the small amount above it, not their full investment income. Enter the lesser figure into this calculator.
Are the thresholds indexed for inflation?
No — the $200k/$250k thresholds were fixed in 2013 and never indexed. This means bracket creep pulls more taxpayers into NIIT every year as incomes rise with inflation. What was a high-earner tax in 2013 increasingly hits upper-middle-income households.
How can I reduce NIIT?
Hold investments in tax-advantaged accounts (NIIT doesn't apply inside 401(k)/IRA/HSA), tax-loss harvest to reduce net gains, spread large capital gains across multiple years, invest in tax-exempt municipal bonds (exempt from NIIT), and manage MAGI below the threshold where feasible.
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Methodology & Review
The Net Investment Income Tax (NIIT) is 3.8% on the lesser of net investment income or MAGI above the threshold ($200k single / $250k married filing jointly, not indexed). The calculator applies the rate to the investment income subject to NIIT; confirm the lesser-of test applies to your situation.
Written by Ugo Candido · Last updated May 17, 2026.