High earners owe an extra 3.8% on investment income. See if it applies to you and how much.
Calculates the 3.8% Net Investment Income Tax you may owe based on your MAGI, net investment income, and filing status.
The Net Investment Income Tax equals 3.8% of the smaller of two amounts: your net investment income, or the amount your modified adjusted gross income (MAGI) exceeds the threshold. Thresholds are 200,000 for single filers and 250,000 for married filing jointly, and they are not indexed for inflation. Because it uses the lesser figure, taxpayers just over the threshold often owe far less than 3.8% of all their investment income.
Net investment income generally includes interest, dividends, capital gains, rental and royalty income, and non-qualified annuities, reduced by related expenses. Wages, self-employment income, and distributions from qualified retirement accounts are excluded, though they can still raise your MAGI. This is a simplified estimate and not tax advice, so use Form 8960 and a tax professional to confirm your liability.
Individuals with net investment income whose MAGI exceeds 200,000 single or 250,000 married filing jointly. Estates and trusts face it at a much lower threshold.
No, the 200,000 and 250,000 thresholds are fixed by statute and have not risen since the tax began in 2013. Over time more taxpayers become subject to it.
Distributions from IRAs and qualified plans are not net investment income, but they do increase MAGI, which can push other investment income into the tax. Roth withdrawals do neither.
See the exact formula and a worked example on our methodology page.