NIIT: The 3.8% Net Investment Income Tax
Who owes Form 8960 tax, which income counts, how MAGI thresholds work for 2026 planning, and how NIIT stacks with capital gains brackets.
Published 2026-06-01 · Updated 2026-07-20
The Net Investment Income Tax is an additional 3.8% on the lesser of net investment income or the excess of MAGI over a statutory threshold. For individuals the common thresholds are $200,000 single / head of household and $250,000 married filing jointly ($125,000 MFS)—unchanged by ordinary inflation adjustments that move income-tax brackets.
Net investment income generally includes interest, dividends, capital gains, rental income, and passive business income, with modifications. Wages and active trade-or-business income usually do not count, which is why material participation and grouping elections matter for landlords and partners.
Stacking with capital gains
Long-term capital gains can face preferential income-tax rates and NIIT in the same year. A large sale can push MAGI over the NIIT line even if your ordinary bracket looks modest. Timing installment sales, charitable contributions of appreciated stock, and opportunity-zone planning are separate strategies—none of them erase NIIT automatically.
Run the NIIT calculator with your MAGI and investment income split, then compare against the capital gains tool so you see both layers before you sell a concentrated position.
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Tax year 2026 · Last reviewed 2026-07-20 · Reviewed by US Tax Tools editorial · Methodology