Can anyone explain the net investment income tax (NIIT)? Who does this apply to?

like
Posting as :
works at
You are currently posting as works at

The Net Investment Income Tax (NIIT) is a 3.8% tax imposed on certain net investment income of individuals, estates, and trusts that exceed specific income thresholds. It was introduced as part of the Affordable Care Act in 2013.

Who Pays the NIIT?

The tax applies to individuals with Modified Adjusted Gross Income (MAGI) over the following thresholds:
• $250,000 for Married Filing Jointly or Qualifying Widow(er)
• $125,000 for Married Filing Separately
• $200,000 for Single or Head of Household

These thresholds are not indexed for inflation, meaning they’ve remained the same since the tax was introduced.

What Income Is Subject to the NIIT?

The 3.8% tax applies to the lesser of:
1. Your net investment income, or
2. The amount by which your MAGI exceeds the threshold for your filing status.

Net investment income includes:
• Interest
• Dividends
• Capital gains (including from the sale of stocks, bonds, real estate, etc.)
• Rental and royalty income
• Non-qualified annuities
• Income from passive activities
• Income from businesses involved in trading financial instruments or commodities

What’s Not Subject to the NIIT?
• Wages and self-employment income
• Social Security benefits
• Tax-exempt interest
• Distributions from qualified retirement plans (401(k), IRA, etc.)
• Gains from the sale of a principal residence (up to the exclusion limit of $250,000 single / $500,000 married filing jointly)

Example Calculation:
• Married Couple (Filing Jointly)
• MAGI: $300,000
• Net Investment Income: $50,000
• Threshold: $250,000

Excess MAGI: $300,000 - $250,000 = $50,000
The NIIT applies to the lesser of $50,000 (excess MAGI) or $50,000 (net investment income).

NIIT: 3.8% × $50,000 = $1,900

Key Takeaways:
• Only applies if your MAGI exceeds the threshold.
• Focuses on investment income, not earned income like wages.
• Planning opportunities exist, like managing capital gains or using tax-advantaged accounts, to reduce exposure.

likehelpful

Just plan for your federal capital gains rate to be 23.8% and then move on in life

likehelpful

Thanks

Tried googling about it but ended up confused. Feels like a lot of people on this app/bowl would have to pay this with the 250k MFJ threshold but just haven’t heard anything about it so was confused if this was the case.

like

Yes. A lot of people here pay it. Just nothing we can about it

likehelpful

Thanks everyone! Seems like it’s just something we have to live with. Was very surprised I had never heard about it before

Related Posts

Currently I have 6.5 years of experience, completed 2 years in current organisation and I got very good hike also (after hike CTC is 24 LPA )
And my manager got changed also but I am frustrated with my new Manager.
should i start preparing for next/better Company like Amazon, Microsoft ?

I was wondering if anyone works as a medical examiner assistant (gov) and what your salary is?

like

Hi Fishes,
Please suggest
Im holding offers from
EY GDS: 18 lpa
IVY comptech: 16lpa
YOE: 5yrs Tech: Unity3D, C#.
Can you guys help which would be better in wlb, job security, benifits. EY Ivy comptech Tata Consultancy Deloitte

like

Anyone starting to hear anything regarding salary increases due to inflation?

like

What’s Accenture’s S&C bonuses like usually?

like

Justifying the Sheraton's painful bed to yourself because the Four Seasons don't recognize your loyalty

like

I have students that need to make up a missing test. I want to keep the integrity and validity of a test.
Any suggestions??

likesmart

What are typical PM title structures? I know they are a bit different everywhere. I’m building a team from the ground up and am curious what other agencies and in house teams look like. Thanks!

like

I started interviewing early Oct with a company that reached out via recruiter. The hiring manager was very straight forward with me that I was his top candidate and I was told all other interviews were very positive incl CMO. The recruiter said they'd be making an offer but it's now been three weeks. Anyone else had the process drag on like this? Meanwhile I'm taking other interviews and was offered a promotion at current company, but was very interested in this one. What would you do?

like

Hello,
I have put down my papers and have a other job offer with good mnc company.
I am not satisfied with the salary as the hike is 27% however the role will give me a good skills and add on my resume.

What should I do?!

like

Are you an elevator or stairs kinda person?

like

What movie title would you use to describe your current job?

like

How can I wear a backpack without wrinkling the shoulders of my dress shirt? Iron every night and they get wrinkled as soon as I put my backpack on.

like

My background check for Blackrock came back last week. It’s now with the background check committee. How long until I get the final OK? No, I am not a criminal. :-)

like

Anyone else think big end of day drop? Scary weekend to hold long through

like

Any Accenture and Accenture federal services fishes how does the bonus look for this year , Any insights what’s the average hike and average bonus ?

*asking for someone else*
Hi lady fish,

I’ve been with Accenture for 10 years and am about to take maternal leave. I got an interesting conversation with HR yesterday about leaving Accenture after maternal leave, and the kicker is to join the client. I got a couple of questions for you guys:

One...did anyone leave Accenture right after maternal leave? If so, what happened? Did they have to pay back anything?

Cont.

like

Data analytics or fullstack developer?
If I want to switch from non IT.

like

Fishes, Facebook reached out for a interview. I am on h1-b and wanted to understand if they are sponsoring GC amidst everything that is going on with the company? Thinking if I should even try.

like

If I apply for 485 after receiving 140 approval (I.e., not concurrently) does the application always go to NBC? I’m ROW for reference. Thanks!

Additional Posts in FIRE Financial Independence Retire Early

If you could right now, would you buy a house in full cash or invest in the market?

like

Have 700K USD worth of invested assets (less real estate, cash/receivables, and precious metals). if I need 4K USD per month for expenses, can I now coast?

like

Nyc couple with $0.5m in income who feels average

Post Photo
funnylike

Are we on recession? My portfolio is super down - low cost ETF investor here

like

Hey fishes, i need advice as to how to invest 200k? Should i go for individual stocks or funds or should i go to financial advisor? If individual stocks then looking for sectors. Can i invest as a VC? Any thoughts or direction please

like

I’m not bad with money but definitely lots of room to improve overall, due to several personal factors I don’t want to list in full here (numerous unanticipated medical bills, bad boyfriends, etc.) Hence why I only have $3k in savings right now. My first mini goal is to have $5k saved by the end of December. I need motivation and words of encouragement. If I pay off my medical bills, I won’t make my goal. I have to start putting saving money first. Getting depressed about my situation.

like

I just hit my lean fire number but am hesitating to pull the trigger, so was hoping to run it by people smarter than me:

- I have a few rentals that bring in ~$1800/mo cash flow, taxes are negligible, Capex incl.
- My paper assets will bring in ~$1200/mo at 3% draw
- I get free Healthcare at the VA
- No plans on kids
- My expenses haven't topped $30k/yr ever
- I could always reenter the workforce if needed (albeit probably not in consulting)

Please point out the flaws here, what am I missing?

likeuplifting

I'm age 40. Does the info below mean if I stop working now and collect the benefits at age 67, I'll get $3403 monthly social security benefits?

Post Photo
like

Anyone know of a good cross-border US/UK financial fiduciary?

like

Buying a house with monthly expense of $4900, although my current rent is only $2350. My total HHI with my husband is about $310K. I’m feeling weary of spending this much but we live in a HCOL area near a major city and we have high taxes. It’s hard to find anything decent under $800K. Should I just suck it up in order to be a homeowner?

like

Thoughts on staking crypto? What’s the safest way.

like

What is your socioeconomic background and how much NW do you consider “enough” to be able to live comfortably?

like

At what investment size should you typically start using fee only financial advisors?

like

Anyone have fee based fiduciary financial advisors they’d recommend? TIA!

like

Anyone here read “Die with Zero”? What are your thoughts on the principles from the book?

like

Probably the antithesis of this bowl - but need some advice. This is for a house in a Southern metro. Built in 1960s completely remodeled in 2000s with some very recent additional remodeling of kitchen and bathrooms. Well kept house. The price will be nearly $1M, the same as something built in 2010+ with similar square footage (because a lot of the price is the lot, its a super expensive zip). Should I steer clear because of the age? Will it cost a ton in maintenance and utility bills?

like

Given crazy market returns recently, do you still expect the market to rise at 10% over the next 30 years?

like

Still using Ally Bank savings account, but the APY had dropped to .60%. Time to move. Any recs on personal savings account? This is my emergency “savings”

like

Do you count your car as part of your NW on Mint/other trackers?

like

Do you DCA or lump your December & April bonus into ETFs?

like

New to Fishbowl?

Download the Fishbowl app to
unlock all discussions on Fishbowl.
That was just a preview…
Sign Up to see all discussions
  • Discover what it’s like to work at companies from real professionals
  • Get candid advice from people in your field in a safe space
  • Chat and network with other professionals in your field
Sign up in seconds to unlock all discussions on Fishbowl.

Already a user?
Login here

Share

Embed this post

Copy and paste embed code on your site

Preview

Download the
Fishbowl app

See what’s happening in your industry
from the palm of your hand.

A phone with Fishbowl app

Scan your QR code to download
Fishbowl app on your mobile

Download app

Sign up for free to view this conversation on Fishbowl

By continuing you agree to Terms of Use and Privacy Policy

Already have an account? Log in

Sign up for free to continue using Fishbowl

By continuing you agree to Terms of Use(New) and Privacy Policy(New)
Messaging rates may apply

Already have an account? Log in

For account settings, visit Fishbowl on Desktop Browser or

General

Legal