NIIT 3.8% Tax Calculator
Estimate Net Investment Income Tax using the Form 8960 lesser-of test. Model MAGI thresholds, net investment income, capital gains, dividends, passive income, deductions, Roth conversion exposure, and estimated payment planning.
Last Updated: May 31, 2026
NIIT Inputs
Estimate Form 8960 exposure by separating non-investment MAGI from net investment income such as interest, dividends, gains, passive rental income, and nonqualified annuities.
Controls the statutory NIIT MAGI threshold.
Wages, retirement distributions, taxable Social Security, active business income, and other MAGI before NII.
Taxable interest from Form 1040 line 2b or Form 8960 line 1.
Qualified dividends can receive preferential regular tax rates, but they still count in NII.
Use net Schedule D gain after capital-loss offsets. Negative values are allowed for planning.
Enter net passive rental or royalty income after property-level expenses.
Income from trading financial instruments or commodities can require Form 8960 review.
Use only deductions not already reflected in the net income fields.
Section 911 foreign earned income add-backs, CFC/PFIC adjustments, and similar NIIT MAGI adjustments.
Optional cash-flow field for estimated payment planning.
NIIT 3.8% Tax
$1,976.00
NIIT Base
$52,000.00
Net Investment Income
$66,000.00
Modified AGI
$252,000.00
MAGI Above Threshold
$52,000.00
Estimated NIIT Balance
$476.00
Form 8960 Readout
The modeled NIIT base is $52,000.00 because the calculator compares $66,000.00 of net investment income with $52,000.00 of MAGI above the selected threshold. Current status: MAGI excess cap applies.
- Filing-status threshold
- $200,000
- Threshold room
- $0.00
- Exposed NII remaining
- $14,000.00
- Effective rate on NII
- 2.99%
- Marginal NIIT on extra investment income
- 3.80%
- Marginal NIIT on extra non-investment income
- 3.80%
- Payments entered
- $1,500.00
- Overpaid
- $0.00
- MAGI needed for full NII exposure
- $14,000.00
NIIT Worksheet Lines
| Worksheet item | Amount |
|---|---|
| 1. Total modeled investment income | $67,000.00 |
| 2. Less Form 8960 deductions | $1,000.00 |
| 3. Net investment income | $66,000.00 |
| 4. Modified adjusted gross income | $252,000.00 |
| 5. Filing-status threshold | $200,000.00 |
| 6. MAGI above threshold | $52,000.00 |
| 7. Lesser of line 3 or line 6 | $52,000.00 |
| 8. NIIT at 3.8% | $1,976.00 |
| 9. Withholding and estimated payments entered | $1,500.00 |
| 10. Estimated NIIT balance due | $476.00 |
Income Classification
| Item | NIIT treatment | Amount |
|---|---|---|
| Non-investment MAGI | MAGI only / adjustment | $185,000.00 |
| Taxable interest | Included in NII model | $2,000.00 |
| Ordinary dividends | Included in NII model | $3,000.00 |
| Qualified dividends | Included in NII model | $7,000.00 |
| Net capital gains | Included in NII model | $55,000.00 |
| Rental, royalty, and passive income | Included in NII model | $0.00 |
| Nonqualified annuities | Included in NII model | $0.00 |
| Passive business income | Included in NII model | $0.00 |
| Trading business income | Included in NII model | $0.00 |
| Other net investment income | Included in NII model | $0.00 |
| MAGI add-backs | MAGI only / adjustment | $0.00 |
| Form 8960 deductions | Included in NII model | $1,000.00 |
NIIT Planning Estimate Disclaimer
This calculator is an educational estimate for individual taxpayers. It does not replace Form 8960, tax software, or professional review for estates, trusts, nonresident aliens, CFC/PFIC interests, business disposition adjustments, passive activity rules, or detailed deduction allocation.
Professional Review Status
This YMYL page has internal methodology review, but no external credentialed professional review is recorded yet.
- Reliance status
- Credentialed tax review required before professional reliance
- Required credentials
- CPA, Enrolled Agent, licensed tax professional
- Review scope
- tax formulas, jurisdiction assumptions, withholding language, filing-sensitive examples, and compliance caveats
Current reviewer: Iliyas Khan, Internal tax and sales-tax methodology reviewer.
This page is educational planning support. A named CPA, EA, or licensed tax professional should review the page before it is positioned as tax advice or used for filing decisions.
Tax credentialed review: professional reliance limit
This page is educational planning support. A named CPA, EA, or licensed tax professional should review the page before it is positioned as tax advice or used for filing decisions. Results should be treated as a preliminary estimate, not a filing instruction, diagnosis, product recommendation, eligibility decision, or compliance sign-off. Required professional review: CPA, Enrolled Agent, licensed tax professional. Source expectation: Review should cite current IRS, state revenue department, payroll-tax, or official tax authority sources where applicable.
Checked by Iliyas Khan
NIIT 3.8% Tax Calculator is checked for formula labels, source links, and result limits.
Iliyas Khan, Chief Operating Officer. Updated May 31, 2026. Scope: tax calculators.
Tax credentialed review: Named internal reviewer: Iliyas Khan, Chief Operating Officer. External credentialed professional review is still required before this page is treated as professional advice.
Internal tax and sales-tax methodology reviewer. Review scope: calculator assumptions, labels, source context, workflow clarity, and compliance-sensitive disclaimers.
Relevant review context: CalculatorWallah tax and sales-tax calculator workflow owner; Source-first review of IRS, state revenue, rate, and filing-sensitive references; Compliance-sensitive labels, assumptions, and user-facing disclaimer review.
Required professional credentials: CPA, Enrolled Agent, licensed tax professional. Scope: tax formulas, jurisdiction assumptions, withholding language, filing-sensitive examples, and compliance caveats.
This page is educational planning support. A named CPA, EA, or licensed tax professional should review the page before it is positioned as tax advice or used for filing decisions.
How To Use The NIIT 3.8% Tax Calculator
Start with filing status and non-investment MAGI. Non-investment MAGI is where you place wages, taxable retirement distributions, taxable Social Security, active business income, and other taxable income that is not net investment income.
Then enter investment income by category. Use net amounts for items such as capital gains and passive rental income when losses or property expenses have already been applied. Use the Form 8960 deductions field only for additional allocable deductions that have not already reduced an income field.
The output shows the two caps separately: net investment income and MAGI above the filing-status threshold. NIIT applies only to the smaller number.
Step 1: Choose filing status
The selected filing status controls the statutory MAGI threshold used on Form 8960.
Step 2: Enter non-investment MAGI
Include wages, retirement distributions, taxable Social Security, active business income, and other MAGI before net investment income.
Step 3: Break out investment income
Enter taxable interest, dividends, net capital gains, rental or royalty income, annuities, passive business income, and other NII items separately.
Step 4: Add Form 8960 deductions and MAGI add-backs
Use deductions only when they are allocable to NII and not already reflected in a net income field. Add section 911 and similar MAGI adjustments when relevant.
Step 5: Review the lesser-of test
NIIT is 3.8% of the lesser of net investment income or MAGI above the threshold. The readout shows which cap controls.
How The NIIT 3.8% Formula Works
NIIT applies at 3.8% to individual taxpayers who have both net investment income and modified adjusted gross income above the applicable threshold. The tax is not charged on all income. It is charged on the lesser of net investment income or MAGI above the threshold.
The thresholds are statutory and are not indexed like ordinary tax brackets. That is why the same threshold amounts continue to matter in high-income planning years.
| Filing status | NIIT MAGI threshold | Planning note |
|---|---|---|
| Single | $200,000 | Same threshold as head of household. |
| Married filing jointly | $250,000 | Also used for qualifying surviving spouse. |
| Married filing separately | $125,000 | Lower threshold can create NIIT exposure earlier. |
| Head of household | $200,000 | Same threshold as single. |
| Qualifying surviving spouse | $250,000 | Same threshold as married filing jointly. |
NIIT 3.8% Tax Guide: Form 8960, MAGI Thresholds, Net Investment Income, Roth Conversion Exposure, Passive Income, And Estimated Payments
What income can be net investment income?
Net investment income is not just one line from a brokerage statement. Form 8960 can include interest, dividends, gains, certain rental and royalty income, nonqualified annuity income, passive activity income, and trading income. The final result can be reduced by properly allocable deductions.
| Income item | NIIT treatment | Calculator note |
|---|---|---|
| Taxable interest | Generally NII | Bank interest, CD interest, corporate bond interest. |
| Dividends | Generally NII | Ordinary and qualified dividends can both count. |
| Capital gains | Generally NII | Includes many stock, fund, crypto, and property gains. |
| Rental and royalty income | Often NII when passive | Enter net amounts after property-level expenses. |
| Nonqualified annuities | Often NII | Qualified retirement-plan distributions are different. |
| Passive business income | Can be NII | Material participation and self-employment treatment can change the result. |
| Trading income | Can be NII | Trading financial instruments or commodities can require Form 8960 detail. |
What is excluded from NIIT?
Some income is not net investment income but still matters. Wages, taxable retirement distributions, taxable Social Security, and Roth conversion income can raise MAGI. When MAGI rises above the threshold, existing investment income can become exposed to the 3.8% tax.
| Income item | NIIT treatment | Why it still matters |
|---|---|---|
| Wages and active compensation | Not NII | Still included in MAGI, so it can expose investment income. |
| Social Security benefits | Not NII | Taxable Social Security can be part of MAGI if included in AGI. |
| IRA, 401(k), and pension distributions | Generally not NII | Taxable distributions can raise MAGI and indirectly increase NIIT. |
| Most self-employment income | Generally excluded | Form 8960 has special rules for business income and self-employed individuals. |
| Excluded home-sale gain | Excluded to the extent not taxed | The regular section 121 exclusion generally keeps that part out of NII. |
| Tax-exempt interest | Generally not NII | Different from the Social Security taxable-benefits worksheet. |
Why the lesser-of test matters
The NIIT base is limited twice. If net investment income is $80,000 but MAGI is only $20,000 above the threshold, the base is $20,000. If MAGI is far above the threshold but net investment income is only $12,000, the base is $12,000. The calculator labels which cap controls so the result is easier to diagnose.
Common planning triggers
NIIT often appears when several decisions happen in the same tax year: a stock sale, a Roth conversion, a required minimum distribution, passive rental income, or a high dividend year. The best estimate usually starts with the full-year MAGI stack, not a single isolated investment item.
| Planning trigger | NIIT effect | How to use the calculator |
|---|---|---|
| Large capital gain year | Raises NII and MAGI at the same time. | Can create full 3.8% exposure when the gain pushes MAGI over the threshold. |
| Roth conversion | Raises MAGI but is not NII. | Can expose existing dividends, interest, gains, or passive income to NIIT. |
| RMD or pension year | Raises MAGI but is generally not NII. | Can still move a taxpayer above the statutory NIIT threshold. |
| Loss harvesting | May reduce net capital gain and NII. | The final result depends on capital-loss limits, carryovers, and Form 8960 treatment. |
Connect NIIT to other tax tools
Use this page when the main question is Form 8960 exposure. If you need regular tax on dividends and interest too, use the Dividend and Investment Income Tax Calculator. If the issue is sale proceeds, cost basis, and holding period, use the Capital Gains Tax Calculator. If ordinary income from a Roth conversion is the driver, use the Roth Conversion Tax Calculator.
Keep the research moving with Dividend and Investment Income Tax Calculator, Capital Gains Tax Calculator, Roth Conversion Tax Calculator, and Federal Income Tax Calculator.
Frequently Asked Questions
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- 1.IRS - Net Investment Income Tax(Accessed May 2026)
- 2.IRS Topic No. 559 - Net Investment Income Tax(Accessed May 2026)
- 3.IRS Instructions for Form 8960(Accessed May 2026)
- 4.IRS Form 8960 - Net Investment Income Tax(Accessed May 2026)
- 5.IRS Questions and Answers on the Net Investment Income Tax(Accessed May 2026)
- 6.IRS Publication 550 - Investment Income and Expenses(Accessed May 2026)