What Is the Net Investment Income Tax (NIIT)?

The Net Investment Income Tax (NIIT) is an additional 3.8% surtax on investment income for higher-income taxpayers. It applies to the lesser of your net investment income or the amount by which your income exceeds $200,000 (single) or $250,000 (married filing jointly). Investment income includes capital gains, dividends, interest, and rental income. Tax-exempt interest and distributions from retirement accounts don't count. Planning your investment withdrawals carefully can help minimize the NIIT.