NIIT 3.8% + Additional Medicare 0.9% Stacking Calculator (2026)
When MAGI crosses $200K single / $250K married, both the 3.8% NIIT and 0.9% Additional Medicare Tax can apply — together adding 4.7% to your effective tax rate on threshold-crossing income.
| Total MAGI | — |
| Threshold | — |
| MAGI over threshold | — |
| NIIT base (lesser of inv income or excess) | — |
| NIIT 3.8% | — |
| Add'l Medicare base (wages over threshold) | — |
| Add'l Medicare 0.9% | — |
| Combined surtax | — |
Two stacked surtaxes hit higher-income households. The Net Investment Income Tax (NIIT) is 3.8% on investment income when MAGI exceeds $200K single / $250K married. The Additional Medicare Tax is 0.9% on wages over the same threshold. Together they can add 4.7% to the marginal rate on threshold-crossing income — a hidden cliff that often surprises taxpayers in the year of a big bonus, Roth conversion, or asset sale.
How NIIT Is Calculated
NIIT (Form 8960) is 3.8% applied to the LESSER of two numbers: (1) net investment income (interest, dividends, capital gains, rental, royalty, passive activity income) or (2) MAGI in excess of threshold. Example: MAGI $300K single, investment income $40K — NIIT base is the lesser of $40K or $100K = $40K. NIIT = $1,520. Exclusions: municipal bond interest, retirement plan distributions (401k, IRA), active business income, gain on sale of active business interest, and (for real estate professionals) rental income from materially participated properties.
Planning To Reduce The Stacking Hit
Five levers to keep MAGI below the threshold or shrink the NIIT base. (1) Spread Roth conversions across years to keep MAGI below $250K (married). (2) Tax-loss harvest to offset realized capital gains before year end. (3) Maximize 401k/403b ($23,500 base + $7,500 catch-up at 50+ in 2026) — directly reduces MAGI. (4) Real estate professional status (750 hours, more than 50% of work time) converts passive rental income to active — escapes NIIT entirely. (5) Municipal bond interest is excluded from both NIIT base and MAGI. For most high earners, the year you sell a business or convert a large IRA is the year to plan most carefully.
Last updated May 2026. Sources: IRS NIIT (Form 8960).