Section 1411 NIIT Rental Income Calculator 2026 β 3.8% Surtax
Calculate the 3.8% Net Investment Income Tax on rental income. See how REPS status, material participation, and MAGI thresholds affect your NIIT obligation.
Income & MAGI
$
Gross rents minus all deductible expenses $
Including rental income and all other income $0
NIIT on Rental (3.8%)
$0
NIIT Tax Base
$0
Ordinary Income Tax
$0
Total Tax on Rental
NIIT Calculation Breakdown
How the 3.8% NIIT Applies to Rental Income
The Net Investment Income Tax (NIIT) under Section 1411 is a 3.8% surtax imposed on the lesser of (1) your net investment income or (2) the excess of your MAGI over the applicable threshold. Rental income is included in NII as passive investment income β unless you qualify as a Real Estate Professional or materially participate in a self-rental with a regrouping election.
The Formula
MAGI Excess = MAX(0, MAGI β Threshold)
NIIT Base = MIN(Net Investment Income, MAGI Excess)
NIIT = NIIT Base Γ 3.8%
(If REPS or material participation: rental NII = $0 β exempt from NIIT)
NIIT Base = MIN(Net Investment Income, MAGI Excess)
NIIT = NIIT Base Γ 3.8%
(If REPS or material participation: rental NII = $0 β exempt from NIIT)
Example
MFJ, MAGI $280K, net rental income $60K (no REPS):
MAGI excess over $250K threshold: $280K β $250K = $30,000
NIIT base: MIN($60,000 rental NII, $30,000 MAGI excess) = $30,000
NIIT: $30,000 Γ 3.8% = $1,140
With REPS: NIIT = $0 (rental removed from NII)
MAGI excess over $250K threshold: $280K β $250K = $30,000
NIIT base: MIN($60,000 rental NII, $30,000 MAGI excess) = $30,000
NIIT: $30,000 Γ 3.8% = $1,140
With REPS: NIIT = $0 (rental removed from NII)
Sources and References (click to expand)
- IRC Section 1411 β Imposition of Tax on Net Investment Income
- IRC Section 469 β Passive Activity Losses and Credits Limited (REPS rules)
- Treasury Regulation 1.1411-4 β Definition of Net Investment Income
- IRS Publication 925 β Passive Activity and At-Risk Rules
- IRS Form 8960 Instructions β Net Investment Income Tax
Extended
REPS Scenario Analyzer & Multi-Property NIIT Calculator
Toggle REPS status to see NIIT impact, SVG comparison chart, multi-property NIIT calculation
Compare NIIT under different REPS and participation scenarios. Add multiple rental properties to calculate total NIIT exposure.
Total Tax: With vs Without REPS
| Property | Net Income | REPS Exempt? | NIIT Due | Ordinary Tax | Total Tax |
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Frequently Asked Questions
What is the 3.8% Net Investment Income Tax on rental income?
Section 1411 imposes a 3.8% surtax on net investment income (NII) for taxpayers with Modified Adjusted Gross Income (MAGI) above $200,000 (single) or $250,000 (married filing jointly). Rental income is specifically included in NII unless you qualify as a Real Estate Professional or materially participate in a self-rental activity.
How does Real Estate Professional Status (REPS) exempt rental income from NIIT?
If you qualify as a Real Estate Professional under IRC 469 β meaning more than 750 hours per year in real property trades and more than 50% of your personal services are in real property trades β your rental activities are treated as an active trade or business, not investment income. This removes rental income from the NII definition under Treas. Reg. 1.1411-4(g) and eliminates the 3.8% NIIT on that income.
What MAGI thresholds trigger the NIIT?
The NIIT applies to the LESSER of your net investment income OR the amount by which your MAGI exceeds the threshold. For 2026: Single/Head of Household: $200,000; Married Filing Jointly: $250,000; Married Filing Separately: $125,000. These thresholds are NOT indexed for inflation β they have remained the same since 2013.
Can material participation in a self-rental exempt income from NIIT?
Yes, with a regrouping election. If you materially participate in a business that rents from you (self-rental), you can elect to regroup those activities under Treas. Reg. 1.469-11(b)(3)(iv). Once regrouped, the self-rental income is treated as active business income rather than passive rental income, removing it from the NII calculation.
What rental deductions reduce NII for NIIT purposes?
Net Investment Income is reduced by deductions allocable to producing that income. For rental income, this includes: mortgage interest, property taxes, depreciation, repairs and maintenance, insurance, property management fees, and other ordinary and necessary rental expenses. Only net rental income (after all allowable deductions) is subject to the NIIT.