Net Investment Income Surtax Thresholds
Direct answer: The 3.8% Net Investment Income Tax applies when your MAGI exceeds $200,000 (single) or $250,000 (married filing jointly). These thresholds have not been adjusted for inflation since 2013. The tax applies to the lesser of your net investment income or the amount your MAGI exceeds the threshold.
NIIT thresholds by filing status (2013-2025)
Individual and joint thresholds are fixed and not indexed to inflation. Trust and estate thresholds are indexed annually.
| Year | Single/HOH | Married Filing Jointly | Married Filing Separately | Trusts and Estates |
|---|---|---|---|---|
| 2013 | $200,000 | $250,000 | $125,000 | $11,950 |
| 2015 | $200,000 | $250,000 | $125,000 | $12,300 |
| 2020 | $200,000 | $250,000 | $125,000 | $12,950 |
| 2023 | $200,000 | $250,000 | $125,000 | $14,450 |
| 2024 | $200,000 | $250,000 | $125,000 | $15,200 |
| 2025 | $200,000 | $250,000 | $125,000 | $15,650 |
Source: IRS: Topic No. 559 Net Investment Income Tax. Last verified: September 2026. Verify current-year figures at IRS.gov before making decisions.
What counts as net investment income?
Net investment income includes interest, dividends, capital gains (short and long term), rental and royalty income, and income from passive business activities. It excludes wages, self-employment income, Social Security benefits, alimony, tax-exempt interest, and retirement plan distributions including IRAs, 401(k)s, and annuities.
Frequently asked questions
What income is subject to the 3.8% net investment income tax?
The NIIT applies to investment income including interest, dividends, capital gains, rental income, and passive business income. It does not apply to wages, active business income, Social Security, or distributions from IRAs and 401(k)s. The tax is calculated on the lesser of your net investment income or the amount your MAGI exceeds the threshold.
Why have the NIIT thresholds not been adjusted for inflation since 2013?
The thresholds were not indexed to inflation when the Affordable Care Act established the NIIT in 2013. This bracket creep means rising wages and investment account values gradually expose more taxpayers to the surtax over time. Congress would need to pass legislation to index or raise the thresholds.
Does the NIIT apply to IRA distributions?
No. Required minimum distributions and other withdrawals from traditional IRAs, 401(k)s, and similar pre-tax accounts are not net investment income for NIIT purposes. However, they do increase your MAGI, which can push more of your actual investment income above the threshold. Roth IRA distributions are excluded from both MAGI and NII.