Net Investment Income Tax Threshold 2026

Who it applies to

It applies to individuals, estates, and trusts with net investment income. For an individual the tax is 3.8 percent of the lesser of net investment income or the amount by which modified adjusted gross income exceeds the threshold for that filing status, so a filer whose income is over the threshold but whose investment income is small pays it on the smaller of the two. Net investment income generally includes interest, dividends, certain annuities, royalties and rents that are not derived in a trade or business the tax does not reach, income from a trade or business that is a passive activity or that trades financial instruments or commodities, and net gains from disposing of property such as stocks, bonds, mutual funds, and real estate. It does not reach wages, unemployment compensation, or income from an active business, and it does not reach income already excluded for regular income tax purposes, such as tax-exempt state or municipal bond interest, Veterans Administration benefits, or the excluded portion of gain on the sale of a principal residence. For an estate or trust the comparison is different: the tax falls on the lesser of undistributed net investment income or the excess of adjusted gross income over the dollar amount at which the highest tax bracket for an estate or trust begins for the year.

What changed this year, and why

Nothing moved for 2026. The net investment income tax is 3.8 percent, and the modified adjusted gross income thresholds above which it applies are $250,000 for married filing jointly or a qualifying surviving spouse, $125,000 for married filing separately, and $200,000 for single or head of household filers, the same amounts as for 2025. The IRS states the rate and the thresholds without attaching a year to either, and that is the substance rather than an accident of drafting: these thresholds were written into the law as fixed amounts and carry no inflation adjustment, so unlike the brackets or the standard deduction they have not moved at all since the tax began.

Common questions

What is the net investment income tax rate for 2026?

3.8 percent. It sits on top of regular income tax and capital gains tax rather than replacing either, so an investor over the threshold pays it in addition to whatever rate the gain or the dividend already carries.

What are the 2026 NIIT thresholds?

$250,000 for married filing jointly or a qualifying surviving spouse, $125,000 for married filing separately, and $200,000 for single or head of household filers. They are modified adjusted gross income thresholds, not net investment income thresholds, so income of every kind counts toward reaching them even though only investment income is taxed once you are over.

Did the thresholds change from 2025?

No. They were $250,000, $125,000 and $200,000 in 2025 and they are the same for 2026. The thresholds are fixed in the statute and are not indexed for inflation, which means more filers cross them each year as incomes rise without anything in the law changing.

What counts as modified adjusted gross income here?

For this tax, the IRS defines it as adjusted gross income for regular income tax purposes increased by the foreign earned income exclusion, with an adjustment for certain deductions related to that excluded income. For a taxpayer who has excluded no foreign earned income, it is generally the same as ordinary adjusted gross income.

Is the tax charged on the whole of my income once I cross the threshold?

No. For an individual it is 3.8 percent of the lesser of net investment income, or the excess of modified adjusted gross income over the threshold. A single filer at $200,000 of wages with a small amount of interest is measured on the smaller of those two, which is why crossing the threshold by a little costs a little.

Does it apply to wages or to business income?

Not to wages, not to unemployment compensation, and not to income from an active business. It does apply to income from a trade or business that is a passive activity for the taxpayer under section 469, or that consists of trading in financial instruments or commodities under section 475(e)(2), and generally to net gains from selling an active partnership or S corporation ownership interest.

How do estates and trusts figure it?

An estate or trust pays 3.8 percent of the lesser of its undistributed net investment income, or the excess of its adjusted gross income over the dollar amount at which the highest tax bracket for an estate or trust begins for the tax year. That bracket figure is adjusted annually, so the effective entry point for an estate or trust moves even though the individual thresholds do not, and it is far below any of them.

Which form reports it?

Form 8960. Individuals carry the result to Form 1040 or Form 1040-SR; estates and trusts carry it to Form 1041. Because the tax is not withheld, the IRS suggests increasing income tax withholding or estimated tax payments to cover it, and points to Publication 505 for how to work that out.

Every amount on this page is a published figure rather than yours. The Net Investment Income Tax calculator takes the number you enter and works it out against them, showing which published figure it used.