Updated October 19, 2026. Quick answer: Publication 550 is the IRS guide to taxes on investments: interest, dividends, investment expenses, basis, and sales and trades of investment property. The web edition is for 2025 returns. Among its figures are the 3.8% net investment income tax and a capital loss deduction limit of $3,000 a year.
More IRS forms and schedules for individual filers, read line by line: Form 6781 instructions.
Quick reference
| Item | As the IRS publication states it |
|---|---|
| Net investment income tax rate (Where to report investment income) | 3.8% |
| NIIT threshold, married filing jointly (General Information table) | $250,000 |
| NIIT threshold, single or head of household (General Information table) | $200,000 |
| Capital loss deduction limit (Capital Losses, chapter 4) | $3,000 ($1,500 if you are married and file a separate return) |
| Maximum capital gain rates for 2025 (chapter 4) | 0%, 15%, 20%, 25%, and 28% |
| Overall SALT deduction limit for 2025 (chapter 3) | $40,000 ($20,000 if married filing separately) |
What the publication covers
The IRS publication says “This publication provides information on the tax treatment of investment income and expenses.” “It explains what investment income is taxable and what investment expenses are deductible.” “It also explains how to determine and report gains and losses on the disposition of investment property”.
The edition described here is Publication 550 (2025), Investment Income and Expenses. The IRS source marks it with the line “For use in preparing 2025 Returns”. It also says “The rules in this publication do not apply to investments held in individual retirement arrangements (IRAs), section 401(k) plans, and other qualified retirement plans.”
The chapters in plain words
Chapter 1 covers investment income: interest, original issue discount, dividends, U.S. savings bonds, Treasury bills, notes and bonds, state and local government obligations, and where each kind is reported. Chapter 2 covers tax shelters and other reportable transactions. Chapter 3 covers investment expenses, including investment interest, bond premium amortization and the limits on deductions. Chapter 4 covers sales and trades of investment property, including basis, holding periods, wash sales, and how capital gains and losses are reported. Chapter 5 explains how to get tax help.
Tables and worksheets
The publication includes Table 1-1, Where To Report Common Types of Investment Income, Table 4-1, a Mutual Fund Record for tracking the adjusted basis of fund shares, Table 4-2 on figuring the basis of shares sold, and Table 4-4, What Is Your Maximum Capital Gain Rate? Worksheet 4-1 is the Capital Loss Carryover Worksheet; this site has a matching page at capital loss carryover worksheet. It also has a worksheet for savings bonds distributed from a retirement or profit sharing plan.
The figures that matter
Net investment income tax: the IRS publication says “The NIIT is a 3.8% tax on the lesser of your net investment income or the amount of your modified adjusted gross income (MAGI) that is over a threshold amount based on your filing status.” The thresholds in its table are $250,000 for Married Filing Jointly or Qualifying Surviving Spouse, $125,000 for Married Filing Separately, and $200,000 for Single or Head of Household.
Capital losses: “Your allowable capital loss deduction, figured on Schedule D (Form 1040), is the lesser of:” $3,000 ($1,500 if you are married and file a separate return) or the total net loss on line 16 of Schedule D. “You can use your total net loss to reduce your income dollar for dollar, up to the $3,000 limit.”
Capital gain rates: “For 2025, the maximum capital gain rates are 0%, 15%, 20%, 25%, and 28%.” “Qualified dividends are the ordinary dividends that are subject to the same 0%, 15%, or 20% maximum tax rate that applies to net capital gain.”
State and local taxes: “For tax year 2025, there is an overall limit of $40,000 ($20,000 if married filing separately) on the deduction for state and local taxes.”
Where to go next
Interest and dividends are reported on Schedule B (Form 1040); the 1099 forms behind them are explained at Form 1099-DIV boxes 1a and 1b and Form 1099-INT box 1. Sales are reported on Form 8949 and Schedule D (Form 1040). Investment interest is claimed on Form 4952, and the 3.8% tax is figured on Form 8960.
Where this comes from
The IRS page About Publication 550 opens with “Publication 550 provides information on the tax treatment of investment income and expenses, including information for individual shareholders of mutual funds or other regulated investment companies, such as money market funds.” It links the PDF and eBook editions and the earlier revisions of the publication.
This page describes the web edition of Publication 550 (2025), Investment Income and Expenses, as served on irs.gov on October 19, 2026. The IRS can revise a publication after we read it, and the IRS page controls. General information, not tax or legal advice.
Common mistakes
- Applying this publication to IRA or 401(k) holdings. The IRS publication says “The rules in this publication do not apply to investments held in individual retirement arrangements (IRAs), section 401(k) plans, and other qualified retirement plans.”
- Reading the NIIT as a tax on all investment income. The publication describes it as “a 3.8% tax on the lesser of your net investment income or the amount of your modified adjusted gross income (MAGI) that is over a threshold amount”
- Expecting a large capital loss to offset all other income in one year. The publication says “You can use your total net loss to reduce your income dollar for dollar, up to the $3,000 limit.”
- Assuming one capital gain rate applies to every gain. The publication lists 0%, 15%, 20%, 25% and 28%, and says “All of your net capital gain is from selling collectibles, so the capital gain rate would be 28%.” as one example.
Related: IRS publications by number, Schedule B (Form 1040), Schedule D (Form 1040), Form 8949, Form 4952, Form 8960, Capital loss carryover worksheet, and Qualified dividends and capital gain tax worksheet.
Sources
- IRS, Publication 550 (2025), Investment Income and Expenses (irs.gov): https://www.irs.gov/publications/p550
- IRS, About Publication 550 (irs.gov): https://www.irs.gov/forms-pubs/about-publication-550
Read from the IRS pages linked above on October 19, 2026. General information, not tax or legal advice. The IRS publication and the instructions for your own form control, and your own facts decide the outcome.