NIIT Calculator: 3.8% Net Investment Income Tax

Use this calculator to estimate the 3.8% net investment income tax (NIIT). Enter your wages, self-employment and other ordinary income, each type of investment income, your investment expenses, and your filing status. The tool works out your modified adjusted gross income (MAGI), your net investment income (NII), how much of it is over the threshold, and the tax.

Short answer: NIIT is 3.8% of the smaller of your net investment income or your MAGI above $200,000 (single or head of household), $250,000 (married filing jointly) or $125,000 (married filing separately). The thresholds are fixed by IRC §1411 and are not indexed for inflation, so more households cross them every year. It is reported on Form 8960 and added to your income tax.

This calculator is for informational purposes only. Results are estimates, and they may differ from a completed Form 8960.

For ways to reduce the tax on gains themselves, see capital gains tax strategies.

How the calculator computes NIIT

1. Gross investment income: interest + dividends + net capital gains + net rental income + royalties + non-qualified annuity income + passive pass-through income.
2. Net investment income: gross investment income minus the expenses Form 8960 still allows. The calculator subtracts investment interest expense. It shows advisory and custodial fees but does not subtract them (see below).
3. MAGI: wages + self-employment income minus the deduction for half of self-employment tax + other ordinary income + gross investment income. Investment interest and advisory fees are below-the-line items, so they do not lower MAGI.
4. Excess: MAGI minus your threshold.
5. NIIT: 3.8% × the smaller of NII or the excess.

Worked example: the default inputs

A married couple filing jointly has $250,000 of wages, $25,000 of pension income, and $240,000 of investment income ($15,000 interest, $35,000 dividends, $125,000 capital gains, $45,000 net rent, $20,000 passive K-1 income). They paid $5,000 of margin interest and $10,000 of advisory and custodial fees.

The $10,000 of fees does not reduce NII, and neither the fees nor the margin interest reduce MAGI. Here NII is smaller than the excess, so the full $235,000 is taxed; if the couple's wages were $60,000 lower, the excess would shrink to $205,000 and become the limit instead.

When the MAGI excess is the limit

A single filer with $180,000 of salary sells stock for a $100,000 long-term gain. MAGI is $280,000, which is $80,000 over the $200,000 threshold. NII is $100,000, but only the $80,000 excess is taxed: $80,000 × 3.8% = $3,040. There is no cliff. If the gain had been $25,000, MAGI would be $205,000 and the tax would be 3.8% of $5,000, or $190.

What counts as net investment income?

The IRS NIIT questions and answers list three broad categories: gross income from interest, dividends, annuities, royalties and rents (unless earned in an active trade or business); income from passive businesses and from trading financial instruments or commodities; and net gains from selling property not held in an active business.

Several items in the right column still raise MAGI. A large IRA distribution or Roth conversion is not NII, but it can push the dividends and gains you already have over the threshold. The MAGI calculator shows how the different MAGI definitions add up, and the Roth conversion calculator shows the bracket cost of a conversion.

Rental income and real estate professionals

Rental income is normally NII. It can fall outside NIIT if the rental is part of a trade or business in which you materially participate, which in practice usually requires qualifying as a real estate professional. Net rental income is reported after expenses such as depreciation, mortgage interest, repairs and property tax, so those already reduce what you enter here. The rental after-tax cash flow calculator works through the rental side.

Which expenses reduce net investment income?

Form 8960 Part II allows only expenses that are deductible in computing taxable income and properly allocable to investment income. According to the Form 8960 instructions:

• Line 9a, investment interest expense: allowed. This is the interest you deduct on Schedule A (from Form 4952), such as margin interest. If you take the standard deduction, you do not deduct it, and it does not reduce NII either.
• Line 9b, state, local and foreign income tax: the part attributable to NII is allowed, subject to the SALT cap.
• Line 9c, miscellaneous investment expenses: generally not deductible. Investment advisory fees, custodial fees, safe deposit box rent and similar costs are miscellaneous itemized deductions, which have been disallowed since 2018. The instructions note that Pub. L. 119-21 (the One Big Beautiful Bill Act, section 70110) made that disallowance permanent.

The calculator follows those rules. It subtracts investment interest and lists advisory and custodial fees as not deductible.

2026 NIIT thresholds

For trusts and estates the threshold is the start of the top income tax bracket for trusts, which is $16,000 for 2026 under Rev. Proc. 2025-32 ($15,650 for 2025). That is why undistributed investment income in a trust is so expensive: the 37% bracket and the 3.8% NIIT both start at the same low amount.

Ways to reduce NIIT

Because NIIT is the smaller of two numbers, you can lower it by reducing either one.

Reduce MAGI or NII directly

• Time capital gains. Selling in a year when MAGI is lower, or spreading a large sale across years with an installment sale, can keep more of the gain under the threshold.
• Harvest losses. Capital losses reduce both NII and MAGI. The tax-loss harvesting calculator shows how much to harvest.
• Hold growth investments in retirement accounts. Income and gains inside an IRA or 401(k) are never NII, and pre-tax contributions lower MAGI.
• Use municipal bonds for taxable fixed income. Tax-exempt interest is excluded from both NII and MAGI.
• Give appreciated stock to charity instead of selling it. The gain is never realized. A charitable remainder trust can spread the gain over many years.

Change the character of the income

• Material participation. Income from a business you actively work in is not NII, even if it comes through a partnership or S corporation.
• Real estate exchanges. A like-kind exchange of investment real estate defers the gain, and with it the NIIT; see the 1031 exchange tax calculator.

One strategy that no longer works: paying advisory fees from a taxable account in the hope of deducting them. Those fees reduce neither NII nor MAGI.

State taxes on top of NIIT

NIIT is federal only, and states tax investment income separately. The calculator shows a note for your state from the site's 2026 state rate table:

• California, New York and New Jersey tax capital gains as ordinary income at top rates of 13.3%, 10.9% and 10.75%. Combined with the 37% federal bracket and 3.8% NIIT, the top marginal rate on short-term gains can exceed 50%.
• Florida, Texas, Tennessee and New Hampshire have no individual income tax on investment income.
• Washington has no broad income tax but levies a 7% excise on long-term capital gains above a $278,000 standard deduction, with 9.9% on taxable gains over $1 million; real estate sales are exempt. For a side-by-side look, see Washington vs. Oregon taxes.

Paying NIIT during the year

Employers do not withhold NIIT. It is part of the tax you must cover through withholding or estimated payments to avoid an underpayment penalty, so if a large sale pushes you over the threshold, increase your W-4 withholding or make an estimated payment in the quarter of the sale. The 0.9% Additional Medicare Tax is a separate tax on wages and self-employment income above the same thresholds; it is not part of NIIT and not included here.

What the calculator does not include

• The foreign earned income exclusion, which is added back to MAGI.
• Tax-exempt interest (enter none; it is excluded).
• Partial-year residents, and NIIT for trusts and estates.
• Capital losses limited to $3,000: enter your net capital gain after losses, or zero if you have a net loss.

To see what the gains themselves cost before NIIT, use the capital gains calculator or the dividend tax calculator.