IRS Tax Tip - Does the Net Investment Income Tax Apply to You
March 2, 2015
If you have income from investments, you may be subject to the Net Investment Income Tax. You may owe this
tax if you receive investment income and your income for the year is more than certain limits. Here are some key
tips you should know about this tax:
• Net Investment Income Tax. The law requires a tax of 3.8 percent on the lesser of either your net
investment income or the amount by which your modified adjusted gross income exceeds a threshold amount
based on your filing status.
• Income threshold amounts. You may owe this tax if your modified adjusted gross income is more than the
following amount for your filing status:
Filing Status Threshold Amount
Single or Head of household $200,000
Married filing jointly $250,000
Married filing separately $125,000
Qualifying widow(er) with a child $250,000
• Net investment income. This amount generally includes income such as:
o Capital gains,
o Rental and royalty income, and
o Non-qualified annuities.
This list is not all-inclusive. Net investment income normally does not include wages and most self-employment
income. It does not include unemployment compensation, Social Security benefits or alimony. It also does not
include any gain from the sale of your main home that you exclude from your income.