2025 Net Investment Income Tax Threshold

Who it applies to

The tax reaches individuals, estates, and trusts. A U.S. citizen or resident who has, for the tax year, modified adjusted gross income over the applicable threshold and net investment income pays 3.8% of the smaller of those amounts, and attaches Form 8960 to the return whenever MAGI is greater than the applicable threshold. Which threshold applies turns on filing status: $250,000 married filing jointly or qualifying surviving spouse, $125,000 married filing separately, and $200,000 single or head of household. Nonresident aliens are outside the tax entirely. A U.S. citizen or resident married to a nonresident alien files as married filing separately for these purposes and uses the $125,000 threshold, unless an election under section 6013 to file jointly is also applied for net investment income tax purposes. Estates and trusts use a different threshold: the amount at which the highest tax bracket in section 1(e) begins.

What changed this year, and why

For 2025 the Net Investment Income Tax is 3.8%, and the threshold amounts that decide whether 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 2025 Instructions for Form 8960 restate those amounts in the table for line 14, and nothing in the instructions changes the rate or the thresholds. The reminders in the 2025 instructions cover other ground: income from transactions involving digital assets, which can be subject to the tax under section 1411, the charitable contribution deduction for electing small business trusts on line 18b, and the exclusion of income taken into account in determining self-employment income.

Common questions

What is the net investment income tax rate for 2025?

The rate is 3.8%. For an individual it is charged on the smaller of net investment income for the year or the amount by which modified adjusted gross income exceeds the threshold for that filing status, so it is never charged on the whole of either figure. Estates and trusts use the same 3.8% rate against a different pair of amounts. The tax is figured on Form 8960 and applies in addition to the regular income tax.

What are the 2025 net investment income tax thresholds?

The threshold amount depends on filing status. It is $250,000 for married filing jointly and for a qualifying surviving spouse, $125,000 for married filing separately, and $200,000 for single or head of household filers. A bankruptcy estate of an individual uses $125,000. These are modified adjusted gross income figures, not net investment income figures, so a filer can be over the threshold on income that is not investment income at all and still owe nothing if there is no net investment income.

Who has to file Form 8960?

Attach Form 8960 to your return if your modified adjusted gross income is greater than the applicable threshold amount for your filing status. The form is what you use to figure the tax, so it is filed alongside the return rather than separately. If you did not exclude income under section 911 and do not own an interest in a controlled foreign corporation or a passive foreign investment company, your MAGI for this purpose is simply the adjusted gross income reported on your Form 1040.

How is the net investment income tax calculated?

Take your net investment income for the year, then take the excess of your modified adjusted gross income over the threshold for your filing status, and apply 3.8% to whichever is smaller. Form 8960 walks through this: line 13 is MAGI, line 14 is the threshold based on filing status, and the tax computed for individuals on line 17 is carried to line 12 of the additional taxes schedule filed with Form 1040.

Do wages count as net investment income?

No. The instructions list wages among the excluded items, along with 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. Net investment income generally means interest, dividends, annuities, royalties, rents, and net gain on dispositions of property, reduced by deductions properly allocable to those items. Wages still raise your modified adjusted gross income, so they can push you over the threshold even though they are never taxed as investment income.

Does the net investment income tax apply to self-employment income?

Not to the part taken into account in determining self-employment income subject to tax under section 1401, which is specifically excluded, including income from farming and nonfarming activities. But the exclusion is narrower than it looks. Items excluded from net earnings from self-employment, such as capital gains, are included in net investment income if they otherwise meet the definition. So a self-employed person can pay self-employment tax on the business income and the net investment income tax on a gain from the same business.

Does the net investment income tax apply to nonresident aliens?

No. The instructions state plainly that the tax does not apply to nonresident alien individuals. A dual-status individual, resident for part of the year and a nonresident for the other part, is subject to the tax only for the portion of the year spent as a U.S. resident, and the threshold amount is not reduced or prorated for that shorter period. A dual-resident individual is generally treated as a U.S. resident unless the treaty conditions in the instructions are met.

Do estates and trusts pay the net investment income tax?

Yes, if they have undistributed net investment income and adjusted gross income above the threshold. The tax is 3.8% of the lesser of undistributed net investment income for the tax year or the excess of adjusted gross income over the applicable threshold. For an estate or trust the threshold is not one of the filing-status figures used by individuals: it is the amount at which the highest tax bracket in section 1(e) begins for the tax year.

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.