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You’ll be subject to the 3.8% Medicare tax on net investment income if both of these are true:
This tax is also known as the Net Investment Income Tax (NIIT).
The threshold amounts are based on your filing status:
For purposes of the NIIT, investment income includes (but isn’t limited to):
Investment income doesn’t include:
Both of these are true for purposes of the NIIT:
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:
These might be subject to NIIT if they have undistributed net investment income:
If you'd like to learn more, see Net Investment Income FAQs at www.irs.gov.