--- title: "Net Investment Income Tax (3.8%): 2026 Guide | TaxWren" description: "The 3.8% NIIT applies when income passes $200,000 (single) or $250,000 (joint) in 2026. What counts as investment income, how it is figured, with examples." url: https://taxwren.com/blog/net-investment-income-tax --- [Investing](/blog/investing) · Explainer # Net investment income tax (NIIT): who pays the 3.8% in 2026 The 3.8% NIIT applies when income passes $200,000 (single) or $250,000 (joint) in 2026. What counts as investment income, how it is figured, with examples. By [the TaxWren team](/about#who-writes) · Updated October 15, 2026 · 3 min read ## Key takeaways - The net investment income tax is 3.8% of the smaller of your net investment income or the amount your modified AGI exceeds $200,000 (single or head of household) or $250,000 (married filing jointly). - It covers interest, dividends, capital gains, rents, royalties and passive business income. Wages and most self-employment income are not part of it. - It comes on top of regular income tax, so a top-bracket long-term gain can face 23.8% federal tax in 2026. The net investment income tax (NIIT) is a 3.8% federal tax on investment income for people with higher incomes. In 2026 it applies when your modified adjusted gross income (MAGI) is above $200,000 for single and head of household filers or $250,000 for married couples filing jointly. You pay it on the smaller of two amounts: your net investment income, or the part of your MAGI over the threshold. ## What are the NIIT income thresholds for 2026? The thresholds depend on filing status and are compared with MAGI, which for most people is the same as adjusted gross income (AGI) on Form 1040. | Filing status | MAGI threshold | Rate | | --- | --- | --- | | Single | $200,000 | 3.8% | | Head of household | $200,000 | 3.8% | | Married filing jointly | $250,000 | 3.8% | Source: IRS Topic 559, Net investment income tax. Married filing separately has its own, lower threshold, listed on the IRS page. ## What counts as net investment income? The IRS says net investment income includes, but is not limited to, interest, dividends, capital gains, rental and royalty income and non-qualified annuities. It also includes income from a business that is a passive activity or that trades financial instruments or commodities. "Net" means losses on the same kinds of income reduce it; the [tax-loss harvesting](/blog/tax-loss-harvesting) guide covers how gains and losses offset. It generally does not include wages, unemployment compensation, Social Security benefits, alimony or most self-employment income. Tax-exempt municipal bond interest and the excluded part of a home sale gain are also outside it. Wages still matter indirectly. They raise your MAGI, so a salary can bring a modest portfolio over the threshold. ## How is the NIIT calculated? Take 3.8% of whichever is smaller: net investment income, or MAGI minus the threshold. Two single-filer examples show why the smaller number changes. MAGI only slightly over the threshold A single filer has $150,000 of wages and a long-term gain of $80,000. MAGI is $230,000, which is $30,000 over the $200,000 threshold. That excess is smaller than the $80,000 gain, so the NIIT is 3.8% × $30,000 = $1,140. MAGI far over the threshold A single filer has $350,000 of wages and a gain of $20,000. MAGI is $370,000, $170,000 over the threshold. The gain is the smaller amount, so the NIIT is 3.8% × $20,000 = $760. The tax is separate from regular income tax on the same gain. For long-term gains taxed at the top federal rate of 20%, adding the NIIT gives 23.8%. The [long-term capital gains rates](/blog/long-term-capital-gains-tax-rates) guide shows where each rate starts, and the [capital gains tax calculator](/capital-gains-tax-calculator) adds the NIIT to your estimate. ## Does the NIIT apply when I sell my home? Only to the taxable part of the gain. The IRS says gain excluded from income for regular tax purposes is not subject to the NIIT. For 2026 the exclusion is up to $250,000 of gain for a single filer or $500,000 on a joint return, if you meet the ownership and use tests. A home sale above the exclusion A single filer with $150,000 of wages sells a main home for a gain of $350,000. The first $250,000 is excluded, leaving $100,000 of taxable gain. MAGI is $250,000, $50,000 over the threshold, which is less than the taxable gain, so the NIIT is $1,900. ## Is the NIIT the same as the Additional Medicare Tax? No. The 0.9% Additional Medicare Tax applies to wages and self-employment income over its own thresholds (see [FICA tax](/blog/fica-tax)). The IRS says you can owe both taxes, but not on the same income: wages face the Additional Medicare Tax and investment income faces the NIIT. ## How do I pay and report the NIIT? Individuals figure the tax on Form 8960 and report it on Form 1040 or 1040-SR. The IRS notes you may need to increase withholding or estimated tax payments to avoid an underpayment penalty. The [estimated tax calculator](/estimated-tax-calculator) shows quarterly payments, and the [income tax calculator](/income-tax-calculator) shows your regular federal tax. This guide covers individuals. Estates and trusts use a different threshold, which we do not cover. State taxes on investment income are separate; the capital gains calculator includes them. ## Sources 1. IRS: [Topic no. 559, Net investment income tax](https://www.irs.gov/taxtopics/tc559) (official) 2. IRS: [Net Investment Income Tax](https://www.irs.gov/individuals/net-investment-income-tax) (official) 3. IRS: [Topic no. 701, Sale of your home](https://www.irs.gov/taxtopics/tc701) (official) Figures come from the data files behind our calculators and update with them. See our [methodology](/methodology) and [editorial policy](/editorial-policy). This article is general information, not tax advice. ## Frequently asked questions ### Does the NIIT apply to my salary? No. The IRS says net investment income does not include wages, unemployment compensation, Social Security benefits or most self-employment income. Your salary still counts toward modified AGI, so it can push your investment income over the threshold. ### Is the NIIT the same as the Additional Medicare Tax? No. They are separate taxes that started in the same year. The 0.9% Additional Medicare Tax applies to wages and self-employment income over its thresholds, and the 3.8% NIIT applies to investment income. The IRS says you can owe both, but not on the same income. ### Do I owe the NIIT when I sell my home? Only on the part of the gain that is taxable. Gain you can exclude from income, up to $250,000 for a single filer or $500,000 for a joint return when you qualify, is not net investment income. A gain above the exclusion is, if your income is over the threshold. ### How do I report the NIIT? Individuals figure it on Form 8960 and report it on Form 1040 or 1040-SR. If you expect to owe it, the IRS says you may need to raise withholding or estimated tax payments to avoid an underpayment penalty. ### Does tax-exempt bond interest count? No. The IRS lists tax-exempt state and municipal bond interest among the items that are not subject to the NIIT. ## Run your own numbers - [Capital gains tax calculator](/capital-gains-tax-calculator) Tax on selling stocks, crypto, property or a home, and on dividends: 0/15/20% long-term and qualified dividend rates, short-term rates, 3.8% NIIT, state tax and the main home exclusion. - [Income tax calculator](/income-tax-calculator) Federal and state income tax owed for 2026. - [Estimated tax calculator](/estimated-tax-calculator) Quarterly federal estimated tax (Form 1040-ES): this year's tax, the safe amount from 90% of this year or 100%/110% of last year, withholding and every due date. ## Latest investing news - October 11, 2026[Treasury will open a Trump account automatically for every eligible child](/news/trump-accounts-automatic-enrollment) ## More on investing - [Long-term capital gains tax rates for 2026: 0%, 15%, 20% brackets](/blog/long-term-capital-gains-tax-rates) - [How are RSUs taxed? Vesting, withholding and selling](/blog/how-are-rsus-taxed) - [Tax-loss harvesting: how it works and what it saves](/blog/tax-loss-harvesting)