Get
Answers

Finding answers to your tax questions is now less taxing.

Browse Tax Articles

H&R Block Tax Professionals relentlessly focus on making sure you profit from every deduction and credit available.

X

Net Investment Income Tax

You’ll be subject to the 3.8% Medicare tax on net investment income if both of these are true:

  • You have unearned income for 2013 or later years.
  • Your modified adjusted gross income (AGI) for the year is more than the threshold amount.

This tax is also known as the Net Investment Income Tax (NIIT).

The threshold amounts are based on your filing status:

  • Single or head of household -- $200,000
  • Married filing jointly or qualifying widow(er)  -- $250,000
  • Married filing separately -- $125,000  

For purposes of the NIIT, investment income includes (but isn’t limited to):

  • Interest
  • Dividends
  • Capital gains
  • Royalties and rents

Investment income doesn’t include:

  • Pension distributions
  • Employee annuities
  • Individual retirement accounts (including Roth IRAs)
  • Profit sharing and stock bonus plans
  • Distributions from deferred compensation plans

Both of these are true for purposes of the NIIT:

  • Net investment income is reduced by certain expenses allocable to that income.
  • Modified AGI is your adjusted gross income increased by the amount of excluded foreign income

If your modified AGI is more than the threshold amount and you have net investment income, you’ll be subject to the 3.8% tax. The tax will be on the lesser of these:

  • Your net investment income
  • Amount of your modified AGI in excess of the threshold amount

These might be subject to NIIT if they have undistributed net investment income:

  • Trusts
  • Estates

If you'd like to learn more, see Net Investment Income FAQs at www.irs.gov.

Look At Your Life Through Taxes

H&R Block Tax Professionals relentlessly focus on making sure you profit from every deduction and credit available.

Calculate Your Refund

H&R Block Tax Professionals relentlessly focus on making sure you profit from every deduction and credit available.

Get Answers To Your Tax Questions

H&R Block Tax Professionals relentlessly focus on making sure you profit from every deduction and credit available.

Read Our Blog

The latest news from the pros at H&R Block.

Take A Look
Read our blog

H&R Block Community

Looking at life through tax, join the conversation.

See More

Tax Videos

Visit our Youtube channel.

Watch Now