Calculate the 3.8% Net Investment Income Tax on rental income, capital gains, and dividends. See if you owe NIIT and how to reduce it.
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InputsYour Numbers
Investment Income
Net Rental Income (annual)?
$
Dividends & Interest?
$
Capital Gains?
$
Other Passive Income?
$
Your Income
Total Modified AGI (MAGI)?
$
Filing Status?
Pro Forma: Income Reduction Strategy
Deductions/Reductions ($)?
$
As-Is AnalysisCurrent
Enter values to see results
NIIT Amount
--
3.8% surtax
NIIT Subject Amount
--
income above threshold
Total Net Invest. Income
--
your NII
NIIT Threshold
--
at your filing status
NIIT Calculation
Net Rental Income--
Dividends & Interest--
Capital Gains--
Other Passive Income--
Total Net Investment Income (NII)--
NIIT Applies To (Lesser of)
Net Investment Income--
MAGI - Threshold--
NIIT Base (lower of above)--
NIIT = Base x 3.8%--
Pro FormaAfter Plan
Enter pro forma values
NIIT After Reduction
--
w/ deductions
NIIT Savings
--
from reducing income
MAGI After Reduction
--
new MAGI
$ Needed to Eliminate NIIT
--
MAGI reduction required
Reduction Strategy
Current NIIT--
NIIT After Reduction--
Annual NIIT Savings--
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1
Enter All Investment Income
NIIT applies to net rental income, dividends, interest, and capital gains. Enter each category separately to see your total NII.
2
Enter Your MAGI
NIIT applies to the LESSER of: your net investment income, or your MAGI above the threshold ($200K single, $250K MFJ). Both numbers matter.
3
Check Your Filing Status
The NIIT threshold varies: $200K for single, $250K for married filing jointly, $125K for married filing separately. Choose correctly.
4
Understand NIIT vs Regular Tax
NIIT is a surtax IN ADDITION to regular income tax and capital gains tax. On a $50,000 gain at 15% LTCG, you would also pay 3.8% NIIT if above the threshold.
5
Model Income Reductions
The pro forma shows how NIIT changes if you reduce your MAGI (retirement contributions, losses, deductions). Even a small MAGI reduction can eliminate thousands in NIIT.
6
NIIT Doesn't Apply to RE Professionals
If you qualify as a Real Estate Professional (REPS) AND materially participate in rental activities, rental income may not be passive -- and therefore not subject to NIIT.
The Net Investment Income Tax (NIIT) is a 3.8% surtax on investment income for taxpayers above certain income thresholds ($200K single, $250K married filing jointly). It was enacted as part of the Affordable Care Act and applies to passive rental income, capital gains, dividends, and interest.
NIIT is calculated on the LESSER of: (1) your total net investment income, or (2) the amount by which your MAGI exceeds the threshold. This means if you are only $10K above the threshold, NIIT only applies to $10K even if your NII is much larger.
Common NIIT reduction strategies: maximizing retirement plan contributions to reduce MAGI, timing capital gains realizations, using tax-loss harvesting, increasing depreciation deductions, and qualifying for REPS status to convert passive rental income to active income.