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How to Determine if the Net Investment Income Tax (NIIT) Applies to You

Posted by Admin Posted on Feb 26 2015

If you have income from investments, you may be subject to the Net Investment Income Tax. You may owe this tax if you receive investment income and your income for the year is more than certain limits. Here are some key tips you should know about this tax:

• Net Investment Income Tax.  The law requires a tax of 3.8 percent on the lesser of either your net investment income or the amount by which your modified adjusted gross income exceeds a threshold amount based on your filing status.

• Income threshold amounts.  You may owe this tax if your modified adjusted gross income is more than the following amount for your filing status:

Filing Status

Threshold Amount

Single or Head of household


Married filing jointly            


Married filing separately    


Qualifying widow(er) with a child


• Net investment income.  This amount generally includes income such as:

  • Interest,
  • Dividends,
  • Capital gains,
  • Rental and royalty income, and
  • Non-qualified annuities.

This list is not all-inclusive. Net investment income normally does not include wages and most self-employment income. It does not include unemployment compensation, Social Security benefits or alimony. It also does not include any gain from the sale of your main home that you exclude from your income.

If you have any other questions about the Net Investment Income Tax, give us a call:  858-487-4580.