Net Investment Income Tax (NIIT) Exposure Calculator
Example: Modified adjusted gross income (MAGI): 230000 $ · Net investment income (dividends, capital gains, interest): 30000 $ · Filing status (0 = Single, 1 = Married Filing Jointly): 0
| NIIT surtax owed (3.8%) | $1,140 |
| NIIT threshold for your filing status | $200,000 |
| Investment income subject to NIIT | $30,000 |
| Your combined federal LTCG rate (including NIIT) | 23.80% |
Worked example
A single filer with $230,000 MAGI and $30,000 in net investment income: NIIT threshold is $200,000. Excess MAGI: $30,000. NIIT applies to the lesser of net investment income ($30,000) or excess MAGI ($30,000) = $30,000. NIIT: $30,000 × 3.8% = $1,140. Combined federal LTCG rate: 15% + 3.8% = 18.8% on those gains — nearly 4 percentage points higher than planning for LTCG alone would suggest.
Frequently asked questions
What counts as net investment income for NIIT?
Net investment income includes interest, dividends, capital gains (short and long-term), rental income (unless you are a real estate professional), royalties, passive activity income, and income from trading in financial instruments. It does NOT include wages, active business income, Social Security, alimony, or qualified retirement distributions.
Does the NIIT threshold adjust for inflation?
No. The NIIT thresholds ($200,000 single, $250,000 MFJ) have not been adjusted for inflation since the tax was enacted in 2013. As income rises with inflation, more filers are pulled into NIIT each year — a phenomenon sometimes called bracket creep.
Can I reduce NIIT by contributing to a 401(k)?
Yes. Pre-tax 401(k) or traditional IRA contributions reduce AGI, which in turn reduces MAGI for NIIT purposes. If your MAGI is close to the threshold, maximizing pre-tax retirement contributions is one of the most efficient ways to reduce or eliminate the NIIT surtax.