Your income
$80,000 above threshold — NIIT applies
NIIT calculation
| Your MAGI | $280,000 |
| NIIT threshold (Single) | $200,000 |
| MAGI above threshold | $80,000 |
| Total net investment income | $40,000 |
| NIIT base (lesser of above two) | $40,000 |
| NIIT rate | 3.8% |
| NIIT owed | $1,520 |
| Taxable interest income | $5,000 |
| Ordinary & qualified dividends | $15,000 |
| Long-term capital gains | $20,000 |
| Total NII | $40,000 |
What is How to Use the NIIT Calculator?
The Net Investment Income Tax (NIIT) is a 3.8% surtax added on top of regular income tax for high earners. It applies when your MAGI exceeds $200,000 (single) or $250,000 (married), and only on the investment income portion. Understanding whether and how much NIIT you owe is essential for accurate tax planning.
How to Use
- Enter your 2026 MAGI (Modified Adjusted Gross Income) — this is your AGI with certain deductions added back.
- Select your filing status. Note: married filing separately has a much lower threshold ($125,000) making the NIIT more likely to apply.
- Enter each type of investment income you expect to receive. Only include passive income — wages and active business income are not NII.
- Review whether the NIIT applies and the estimated tax amount. Use the breakdown to identify which income types contribute most.
- Read the reduction strategies to decide whether to adjust your investment approach before year-end.
Why Use This Tool?
Tips & Best Practices
- Municipal bond interest is excluded from both regular income tax AND NII — a double benefit for high earners in the NIIT zone.
- Rental real estate professionals who spend 750+ hours per year materially participating in their rentals can treat rental income as active (non-passive), removing it from NII.
- Tax-loss harvesting reduces capital gains, which directly reduces NII and therefore NIIT. A $10,000 gain offset saves $380 in NIIT alone, plus regular capital gains tax.
- IRA and 401(k) distributions (including RMDs) are NOT included in NII — but they do increase your MAGI, which can push more investment income above the NIIT threshold.
- Roth conversions increase MAGI temporarily, potentially triggering or increasing NIIT in the conversion year. Plan conversions carefully when you have significant investment income.
Frequently Asked Questions
What is the NIIT rate in 2026?
The NIIT rate is 3.8% — unchanged since it was introduced in 2013. It applies to the lesser of your net investment income or the amount by which your MAGI exceeds the threshold. The thresholds ($200,000 single, $250,000 MFJ) are not indexed for inflation.
Does NIIT apply to capital gains?
Yes, both short-term and long-term capital gains are included in net investment income. A long-term capital gain taxed at 20% could face an additional 3.8% NIIT, for a combined federal rate of 23.8% — plus any applicable state tax.
Are IRA distributions subject to NIIT?
No. Traditional IRA distributions are not net investment income and are not subject to NIIT. However, they do increase your MAGI, which can push more of your actual investment income above the NIIT threshold.
How do I report NIIT?
NIIT is calculated on IRS Form 8960 (Net Investment Income Tax — Individuals, Estates, and Trusts) and the resulting tax is entered on Schedule 2 of Form 1040. If you expect to owe NIIT, include it in your estimated quarterly tax payments to avoid underpayment penalties.