Net Investment Income Tax

The Net Investment Income Tax (NIIT) is an additional tax applied to certain investment earnings, such as interest, dividends, and capital gains, for higher-income individuals. If your modified adjusted gross income exceeds specific thresholds—$200,000 for single filers or $250,000 for married couples filing jointly—an extra 3.8% tax is levied on your net investment income. This tax aims to help fund healthcare initiatives and affects only those with significant investment income, ensuring that higher earners contribute more from their investment returns.