Net Investment Income Tax (NIIT) Calculator
NIIT (Net Investment Income Tax) is a 3.8% federal surtax on investment income above MAGI thresholds. Often catches high earners by surprise — affects nearly all dividends, gains, and rental income above the limit.
| Investment income (interest + dividends + cap gains + rental) | — |
| MAGI | — |
| Filing status threshold | — |
| Excess MAGI over threshold | — |
| NIIT base (lesser of NII or excess MAGI) | — |
| NIIT tax (3.8% × base) | — |
The Net Investment Income Tax (NIIT) is a 3.8% federal surtax on investment income for high earners, created by the 2010 Affordable Care Act and unchanged by TCJA/OBBB. Thresholds: $200,000 MAGI (single/HoH), $250,000 (MFJ), $125,000 (MFS). The surtax applies to the LESSER of your net investment income or your MAGI excess above threshold — so partial NIIT exposure is common. Critically, the thresholds are NOT inflation-indexed, so more taxpayers cross each year.
What Counts as Investment Income for NIIT
Subject to NIIT: interest (taxable and partially tax-exempt — Treasury interest is also subject), dividends (both qualified and ordinary), capital gains (long-term and short-term), passive rental income, royalties, non-qualified annuity income, business income from passive activities. NOT subject: wages, self-employment income, retirement plan distributions (Traditional 401(k), IRA, etc.), Social Security benefits, gain on sale of active business interest, gain on sale of primary residence within $250K/$500K exclusion. Roth distributions never count (not investment income).
MAGI Calculation for NIIT
MAGI for NIIT purposes = AGI + foreign earned income exclusion (Section 911) + certain treaty exemptions. For most taxpayers, MAGI = AGI. Reducing MAGI by even $5,000-$10,000 can drop you below the threshold entirely, eliminating NIIT exposure. Traditional 401(k), HSA, and pre-tax FSA contributions all reduce MAGI. Roth conversions INCREASE MAGI and can push you above threshold — plan carefully.
Real Estate Professional Status to Avoid NIIT
Passive rental income is subject to NIIT. But if you qualify as a real estate professional (750+ hours in real property trades, more than half of personal services), your rental activities can be treated as non-passive — bypassing NIIT entirely. This is one of the strongest tax planning levers for high-net-worth real estate investors. Cost segregation studies with bonus depreciation (100% in 2026) can also generate paper losses that reduce or eliminate the NIIT base by offsetting other investment income.
Last updated May 2026. Sources: IRS NIIT FAQ.