What is the Net Investment Income Tax (NIIT)? 

Calculating Net Investment Income Tax

The Net Investment Income Tax (NIIT) went into effect on January 1, 2013 and applies at a rate of 3.8% to certain net investment income of individuals, estates and trusts. The tax is imposed on individuals with Net Investment Income and Modified Adjusted Gross Income (MAGI) over the following thresholds: 

Filing Status 

Threshold Amount 

Married filing jointly 


Married filing separately 




Head of household (with qualifying person) 


Qualifying widow(er) with dependent child 


Investment income includes, but is not limited to interest, dividends, capital gains, rental and royalty income, non-qualified annuities, income from businesses involved in trading of financial instruments or commodities and businesses that are passive activities to the taxpayer. 

The NIIT of 3.8% appears in the Tax Clarity software on the Tax Map as an additional 3.8% added to a standard tax threshold. Example 24% + 3.8% = 27.8% 

In the Details section NIIT appears underneath the MAGI. 

Net Investment Income Tax Forms

  1. Individuals, estates, and trusts will use Form 8960 
  2. For individuals, the tax will be reported on the Form 1040.
  3. For estates and trusts, the tax will be reported on the Form 1041.