2028 NIIT

The 2028 Net Investment Income Tax (NIIT) is 3.8% on the lesser of (a) net investment income or (b) MAGI exceeding $200k single / $250k MFJ / $125k MFS. Thresholds are statutory and have NOT been indexed for inflation since 2013 — more filers hit it every year. Affordable Care Act surtax.

What Counts as NII

Interest, dividends, capital gains, rental income (unless real estate professional), royalties, non-qualified annuity income, gain on sale of investment property. Excludes: wages, self-employment income, active business income, retirement distributions (401k/IRA), gain on home sale (within $250k/$500k exclusion).

Static Thresholds Bracket Creep

$200k/$250k thresholds set in 2013 by Affordable Care Act and never indexed. 13+ years of inflation: real threshold equivalent to ~$280k/$350k in 2028 purchasing power. More middle-income filers face NIIT every year. Strong case to push Congress to index.

Tax-Loss Harvesting + NIIT

Net investment income = gross investment income - allocable deductions (investment interest, state tax on investment income, advisor fees). Capital losses offset gains for NIIT same as regular tax. Strategic loss harvesting near MAGI threshold = double benefit.

Real Estate Professional Election

RE professional + material participation = rental income/loss not NII. 750+ hours + >½ working time in real property trades. High bar but can save 3.8% on rental income. Form 8582-CR + grouping election critical.

Last updated May 2026. Sources: IRS NIIT.