Net Investment Income Tax Calculator 2025 (NIIT 3.8%)
Calculate the 3.8% Net Investment Income Tax (NIIT) based on your investment income and MAGI. Includes threshold analysis and NIIT planning strategies for 2025.
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Total income including investment income $
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Advisory fees, etc. allocable to investment income $0
NIIT Due (3.8%)
$0
Net Investment Income
$0
MAGI Above Threshold
$0
NIIT Base (Lesser Amount)
NIIT Calculation Breakdown
How to Use This NIIT Calculator
Enter your total MAGI (which includes all income β wages, business income, and investment income). Enter each category of investment income separately. The NIIT is calculated on the lesser of your net investment income or your MAGI above the applicable threshold.
This means if your MAGI is only slightly above the threshold, only a small portion of your investment income is subject to the 3.8% surtax.
The Formula
Net Investment Income = Capital Gains + Dividends + Interest + Passive Income β Expenses
MAGI Excess = MAGI β Threshold ($200K single / $250K MFJ / $125K MFS)
NIIT Base = Min(Net Investment Income, MAGI Excess)
NIIT = NIIT Base Γ 3.8%
MAGI Excess = MAGI β Threshold ($200K single / $250K MFJ / $125K MFS)
NIIT Base = Min(Net Investment Income, MAGI Excess)
NIIT = NIIT Base Γ 3.8%
Example
Alex, single, MAGI $250,000, investment income $50,000 in 2025:
Threshold for single: $200,000
MAGI excess: $250,000 β $200,000 = $50,000
Net investment income: $50,000
NIIT base: Min($50,000, $50,000) = $50,000
NIIT: $50,000 Γ 3.8% = $1,900
Threshold for single: $200,000
MAGI excess: $250,000 β $200,000 = $50,000
Net investment income: $50,000
NIIT base: Min($50,000, $50,000) = $50,000
NIIT: $50,000 Γ 3.8% = $1,900
Extended
NIIT Planning Strategies
See how different strategies can reduce or eliminate your Net Investment Income Tax
Explore strategies that can reduce or eliminate your Net Investment Income Tax liability.
NIIT Reduction Strategies
| Strategy | How It Helps | Est. Annual Saving |
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NIIT at Different MAGI Levels (Net Investment Income: $50,000, Single)
| MAGI | MAGI Excess | NIIT Base | NIIT Due |
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Frequently Asked Questions
What is the Net Investment Income Tax (NIIT)?
The Net Investment Income Tax is a 3.8% surtax that applies to net investment income for taxpayers whose Modified Adjusted Gross Income (MAGI) exceeds certain thresholds: $200,000 for single filers, $250,000 for married filing jointly, and $125,000 for married filing separately. It was enacted as part of the Affordable Care Act in 2013 and applies to investment income such as capital gains, dividends, interest, rental income and royalties.
What types of income are subject to NIIT?
Net investment income subject to NIIT includes: capital gains (both short-term and long-term), dividends (qualified and ordinary), interest income, passive rental income, passive business income, royalties, and annuity income. It does not include wages, self-employment income, active business income, distributions from qualified retirement plans (401k, IRA), or tax-exempt interest.
How is the NIIT calculated?
NIIT is 3.8% of the lesser of: (1) your net investment income, or (2) the amount by which your MAGI exceeds the applicable threshold ($200,000 single/$250,000 MFJ). For example, if your MAGI is $220,000 (threshold $200,000) and net investment income is $30,000, the NIIT applies to the lesser of $30,000 and $20,000, so NIIT = $20,000 Γ 3.8% = $760.
Does NIIT apply to IRA and 401(k) distributions?
No. Distributions from traditional IRAs and 401(k) plans are not subject to NIIT because they are not considered net investment income. However, these distributions DO count toward your MAGI, which could push other investment income over the NIIT threshold. Roth IRA qualified distributions are also excluded from NIIT and do not affect MAGI.
How can I reduce or avoid NIIT?
Strategies to reduce NIIT include: investing in tax-exempt municipal bonds (interest exempt from NIIT), maximising pre-tax retirement contributions to reduce MAGI, using tax-loss harvesting to offset gains, shifting investments to Roth accounts (no NIIT on qualified distributions), investing in passive activities that generate losses to offset passive income, and timing capital gains realisations in lower-income years.