2022 Net Investment Income Tax Threshold
For 2022, the Net Investment Income Tax Threshold is 3.8% (Rate), $250,000 (Married filing jointly), $125,000 (Married filing separately) and $200,000 (Single or head of household).
Effective 2022-01-01Source: 2022 Instructions for Form 8960 (IRS)Verified 2026-08-29
Compared with 2021
Every figure on this page is unchanged from 2021.
| Item | 2021 | 2022 | Change |
|---|---|---|---|
| Rate | 3.8% | 3.8% | +0% (+0.0%) |
| Married filing jointly | $250,000 | $250,000 | +$0 (+0.0%) |
| Married filing separately | $125,000 | $125,000 | +$0 (+0.0%) |
| Single or head of household | $200,000 | $200,000 | +$0 (+0.0%) |
Who it applies to
Individuals, estates, and trusts that have net investment income and modified adjusted gross income above the applicable threshold amount.
What changed this year, and why
The Net Investment Income Tax (NIIT) thresholds and rate for tax year 2022, as published by the IRS in the Instructions for Form 8960.
Common questions
- What is the Net Investment Income Tax rate for 2022?
- The rate is 3.8%.
- What are the income thresholds for 2022?
- The threshold depends on filing status: $250,000 for married filing jointly, $125,000 for married filing separately, and $200,000 for single or head of household.
- How is the tax calculated?
- The tax is 3.8% of the smaller of net investment income or the amount by which modified adjusted gross income exceeds the applicable threshold.
What the 3.8% is actually charged on
The 3.8% Net Investment Income Tax is imposed on specific categories of passive earnings rather than on all sources of income. Net investment income generally includes gross income from interest, dividends, annuities, royalties, and rents, but only when these amounts are not derived from the ordinary course of a trade or business that is neither a passive activity nor a trading business. It also captures income from passive activities and from trades or businesses of trading in financial instruments or commodities. In addition, net gain from the sale or disposition of property is included, except for gain attributable to property held in a non-passive, non-trading trade or business. After totaling these items, allowable deductions that are properly allocable to the investment income or net gain are subtracted to arrive at the final net investment income figure. This definition ensures that active business income earned through substantial participation is generally excluded, while passive returns on capital and speculative gains from financial assets fall within the scope of the tax.
Net investment income. Generally, net investment income includes gross income from interest, dividends, annuities, royalties, and rents, unless they’re derived from the ordinary course of a trade or business that isn’t (a) a passive activity, or (b) a trade or business of trading in financial instruments or commodities. In addition, net investment income includes other gross income derived from a trade or business that’s (a) a passive activity, or (b) a trade or business of trading in financial instruments or commodities. Additionally, net investment income includes net gain (to the extent taken into account in computing taxable income) attributable to the disposition of property other than property held in a trade or business that’s not (a) a passive activity, or (b) a trade or business of trading in financial instruments or commodities. To arrive at net investment income, the above items are reduced by deductions allowed against the income tax that are properly allocable to those items of gross income or net gain.
2022 Instructions for Form 8960, Net Investment Income Tax (IRS)
Wages, Social Security and retirement income are outside it
The 3.8% Net Investment Income Tax is not applied to all of a taxpayer's earnings. The statute draws a line between investment returns and income earned through work or government benefit programs. Wages, salaries, tips, and other compensation for personal services are subject to regular income tax and payroll taxes but are never counted as net investment income. The same is true for unemployment compensation, Alaska Permanent Fund Dividends, and alimony. Social Security benefits are also excluded, whether they are partially taxable under the regular income tax rules or not. Distributions from qualified retirement plans are not treated as investment income for NIIT purposes, even though they may consist entirely of interest, dividends, or capital gains that accumulated inside the account. Finally, income that is already subject to self-employment tax is specifically excluded, so it is not taxed twice. Tax-exempt interest, such as that from municipal bonds, is also excluded. These exclusions mean that the 3.8% rate is charged only on passive investment returns that fall within the definition of net investment income.
Excluded income. Excluded income means: • Income excluded from gross income in chapter 1 of the Internal Revenue Code; • Income not included in net investment income; and • Gross income and net gain specifically excluded by section 1411, related regulations, or other guidance published in the Internal Revenue Bulletin. Examples of excluded items are: • Wages, • Unemployment compensation, • Alaska Permanent Fund Dividends, • Alimony, • Social security benefits, • Tax-exempt interest income, • Income from certain qualified retirement plan distributions, and • Income subject to self-employment taxes.
2022 Instructions for Form 8960, Net Investment Income Tax (IRS)
You are taxed on the smaller of two amounts
For 2022, the Net Investment Income Tax is calculated as 3.8% applied to the lesser of two amounts: your actual net investment income for the year, or the amount by which your modified adjusted gross income (MAGI) exceeds the threshold that corresponds to your filing status. This structure means that even if you have a large portfolio generating investment returns, the tax is capped at the smaller of those two figures. If your MAGI exceeds the threshold by a modest amount but your net investment income is much larger, the tax is applied only to that modest excess of MAGI over the threshold. Conversely, if your investment income is small but your MAGI exceeds the threshold by a large amount, the tax is based on the smaller investment income figure. The threshold amounts for 2022 are $250,000 for married filing jointly or qualifying widow(er), $125,000 for married filing separately, and $200,000 for single or head of household filers. The IRS uses this lesser-of design so that taxpayers who are barely over the income threshold do not owe the full 3.8% on all of their investment income, and taxpayers with high investment income but only a small excess over the threshold are not taxed on income they effectively earned below the line.
Individuals who have for the tax year (a) MAGI that’s over an applicable threshold amount, and (b) net investment income, must pay 3.8% of the smaller of (a) or (b) as their NIIT.
2022 Instructions for Form 8960, Net Investment Income Tax (IRS)
When Form 8960 has to be attached
Form 8960 must be attached to your federal income tax return whenever your modified adjusted gross income (MAGI) exceeds the threshold amount for your filing status. For 2022 those thresholds are $250,000 for married filing jointly or qualifying widow(er), $125,000 for married filing separately, and $200,000 for single or head of household. If your MAGI is at or below the applicable threshold, you do not file Form 8960 even if you received substantial interest, dividends, or capital gains during the year. The form is used to compute the amount of Net Investment Income Tax you owe, which is 3.8% of the smaller of your net investment income or the excess of your MAGI over the threshold. Taxpayers who are below the threshold but still have investment income are not required to file the form because no tax is due. Estates and trusts that have undistributed net investment income and adjusted gross income above the estate-and-trust threshold must also attach Form 8960 to their returns.
Who Must File Attach Form 8960 to your return if your modified adjusted gross income (MAGI) is greater than the applicable threshold amount.
2022 Instructions for Form 8960, Net Investment Income Tax (IRS)
The tax does not reach a nonresident alien
The Net Investment Income Tax does not reach nonresident alien individuals. If a taxpayer is classified as a nonresident alien for federal tax purposes, the 3.8% tax does not apply regardless of how much investment income or MAGI the person has. However, a special rule applies when a U.S. citizen or resident is married to a nonresident alien. In that situation, the couple's filing status for purposes of determining MAGI, net investment income, and NIIT liability is treated as married filing separately, with its threshold of $125,000. The IRS does provide certain elections that may allow a couple filing jointly with an NRA spouse to alter this treatment, but absent such an election, the U.S. spouse must apply the married-filing-separately threshold and compute any NIIT accordingly. This rule prevents nonresident aliens from being drawn into the U.S. net investment income tax system while still ensuring that U.S. persons married to them cannot use the higher joint threshold.
Nonresidents. The NIIT doesn’t apply to nonresident alien (NRA) individuals. If you’re a U.S. citizen or resident married to an NRA, your filing status will be married filing separately for purposes of determining your MAGI, net investment income, and whether you’re subject to the NIIT.
2022 Instructions for Form 8960, Net Investment Income Tax (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
2022 Instructions for Form 8960 (IRS)
- Rate
must pay 3.8% of the smaller of (a) or (b) as their NIIT.
- Married filing jointly
Married Filing Jointly or Qualifying Widow(er) is $250,000.
- Married filing separately
Married Filing Separately is $125,000.
- Single or head of household
Single or Head of Household is $200,000.