Updated October 24, 2026. Quick answer: Tax Topic 559 is the IRS page on the net investment income tax, or NIIT. It says a 3.8 percent tax applies to individuals, estates and trusts that have net investment income above applicable threshold amounts. The page lists the thresholds by filing status, what counts as investment income, and the form used.
Quick reference
| Item | What the IRS topic says |
|---|---|
| Who it applies to | “A 3.8 percent net investment income tax (NIIT) applies to individuals, estates, and trusts that have net investment income above applicable threshold amounts.” |
| Married filing jointly | “$250,000 for married filing jointly or qualifying surviving spouse” |
| Married filing separately | “$125,000 for married filing separately” |
| Single or head of household | “$200,000 for single or head of household” |
| The form | “Compute the tax on Form 8960” |
How the tax works for individuals
The IRS topic says “In the case of an individual, the NIIT is 3.8 percent on the lesser of:” Two amounts are compared: “the net investment income, or” and “the excess of modified adjusted gross income (MAGI) over the following threshold amounts:”
The thresholds 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”. For estates and trusts, the topic says “In the case of an estate or trust, the NIIT is 3.8 percent on the lesser of:” Our page on the net investment income tax has more on the thresholds.
What counts as net investment income
The topic says “In general, net investment income for purpose of this tax, includes, but isn’t limited to:” Its list names “interest, dividends, certain annuities, royalties, and rents” and “net gains from the disposition of property such as stocks, bonds, mutual funds, and real estate”.
It also says what is left out: “The NIIT doesn’t apply to wages, unemployment compensation, or income from an active business.” It adds “The NIIT also doesn’t apply to certain types of income that taxpayers can exclude for regular income tax purposes such as tax-exempt state or municipal bond interest, Veterans Administration benefits, or gain from the sale of a principal residence on that portion that’s excluded for income tax purposes.”
On the income measure, the topic says “For individual taxpayers who haven’t excluded any foreign earned income, their MAGI is generally the same as their regular AGI.” See Roth conversions and the net investment income tax for a related question.
Reporting and withholding
For the form, the topic says “Compute the tax on Form 8960”. It adds that “Individuals report this tax on Form 1040, U.S. Individual Income Tax Return or Form 1040-SR, U.S. Tax Return for Seniors;” and “Estates and trusts report this tax on Form 1041, U.S. Income Tax Return for Estates and Trusts.” See our Form 8960 page and Schedule 2 line 12.
On payments during the year, the topic says “Taxpayers may need to increase their income tax withholding or estimated taxes because of any additional tax liability from the NIIT to avoid certain penalties.”
Where this comes from
This page describes the IRS page titled Topic no. 559, Net investment income tax, as served on irs.gov on October 24, 2026. The IRS page shows that it was last reviewed or updated on 24 Sep 2026. The IRS can change a topic after we read it, and the IRS page controls. General information, not tax or legal advice.
Common mistakes
- Applying the tax to all income. The topic says it does not apply to “wages, unemployment compensation, or income from an active business”
- Using one threshold for everyone. The topic lists a different amount for each filing status
- Forgetting that the tax is the lesser of two amounts. The topic says “the NIIT is 3.8 percent on the lesser of:”
- Assuming MAGI always differs from AGI. For many filers, “their MAGI is generally the same as their regular AGI”
Related: IRS tax topics by number, Net investment income tax, Form 8960, Schedule 2 line 12: net investment income tax, and Roth conversion and the net investment income tax.
Find the right next step for your situation
About how much do you have invested? Pick the range that fits; your next step appears immediately below.
Talk to an advisor about investment income tax
For U.S. investors with $250,000 or more in investable assets. WiserAdvisor is an independent service matching you with 2 to 3 vetted advisers. Its form asks for your ZIP code and answers to a few questions; a match is not guaranteed.
Free to request, with no obligation to hire. By submitting, you consent to calls, texts and emails from WiserAdvisor and up to three advisers. Advisers pay for introductions.
Clear Money Guide may earn a referral payment for a qualifying completed form. An introduction is not a Clear Money Guide recommendation.
Opens on WiserAdvisor’s site in a new tab.
Explore advisor help with NIIT planning
Price the destination before you decide. The matching service below introduces you to advisers who pay to meet you.
Before you start, what actually happens. The form is run by Kapitalwise, our advisor-matching partner. Kapitalwise sends your details to advisers who pay for the introduction, so expect calls and texts. Clear Money Guide may earn a referral payment for a qualifying submitted form, whether or not you ever hire anyone. This is free to you and there is no obligation to hire anyone.
The Kapitalwise form opens here; you stay on this page.
What happens when you press the button
It asks about nine questions: age, investable assets, location; then your name, email and phone number, and verifies the phone by text. Nothing loads and nothing reaches Kapitalwise until you press the button.
Prefer flat-fee or hourly pricing instead? Compare ranges here.
Answer againSources
- IRS, Topic no. 559, Net investment income tax (irs.gov): https://www.irs.gov/taxtopics/tc559
- IRS, Tax topics index (irs.gov): https://www.irs.gov/taxtopics
Read from the IRS pages linked above on October 24, 2026. General information, not tax or legal advice. The IRS topic page and the instructions for your own form control, and your own facts decide the outcome.