$80K of Investment Income at $230K MAGI Triggers a $1,140 Surtax Most People Don't Know Exists

A threshold that’s never moved, quietly reaching more people every year

We ran $80,000 of net investment income against a $230,000 MAGI through the calculator for a single filer — $30,000 over the $200,000 threshold, so the smaller of the two ($30,000) gets taxed at 3.8%, for a $1,140 surtax. What makes NIIT unusual: its $200,000/$250,000/$125,000 thresholds have been fixed since the tax began in 2013 and are NOT indexed for inflation — confirmed unchanged again for 2026 under the One Big Beautiful Bill Act of 2025. Every other major tax threshold in the code moves with inflation; this one doesn’t, so it captures a growing share of moderate-income investors each year without Congress ever voting to expand it.

How the math works

niitOwed = min(netInvestmentIncome, max(0, magi − threshold)) × 3.8%. Net investment income covers interest, dividends, capital gains, and rental/passive income — not wages or self-employment income (those instead trigger the separate 0.9% Additional Medicare Tax above similar-but-not-identical thresholds).

What this tool doesn’t model: the interaction with the separate 0.9% Additional Medicare Tax on wages/SE income (a household can owe both), state-level equivalents (a few states have their own versions), or timing strategies (deferring a large capital gain or Roth-converting in a lower-MAGI year) that can reduce exposure — see the Capital Gains Harvesting and Roth Conversion Ladder calculators for those angles.

Math runs locally. Inputs never leave your browser. Source on github.

Where this doesn’t apply

• Your income is mostly wages, not investment income. A high-MAGI household with modest investment income can owe little or no NIIT, since it’s calculated on the lesser of the two figures — check the Additional Medicare Tax instead for the wage-income equivalent.
• The income is from a tax-advantaged account. Growth and distributions inside a 401(k), traditional or Roth IRA aren’t counted as net investment income for NIIT purposes.
• You’re self-employed and the income is active business income. NIIT generally doesn’t apply to income from an active trade or business you materially participate in — that’s a different tax picture (see Self-Employment Tax).
• You’re in a temporarily low-income year. A sabbatical, early retirement gap year, or business loss year can drop MAGI below the threshold entirely — a real opportunity to realize gains or convert to Roth without triggering NIIT.

What to actually do

1. Check your prior-year Form 8960 or estimate your current net investment income against your projected MAGI.
2. If you’re near the threshold, consider whether timing a large capital gain differently could keep you under it in a given year.
3. Municipal bond interest is generally excluded from both regular tax and NIIT — a real (if modest) NIIT-avoidance lever for taxable-account fixed income.
4. If you’re self-employed, confirm with a tax professional whether specific income streams count as NIIT-exposed passive income or NIIT-exempt active business income.
5. Factor NIIT into estimated quarterly tax payments if you’re consistently over the threshold — see the Quarterly Estimated Tax calculator.