After TaxTax Playbook

Tax Playbook · Investment tax wins

Watch the 3.8% NIIT tripwire

High earners can pay an extra 3.8% tax on investment income called the Net Investment Income Tax. It kicks in when your income passes $200,000 if you are single or $250,000 if you are married filing jointly, and those lines never move up with inflation. For example, a married couple with $300,000 of income and $40,000 of investment gains pays 3.8% of the $40,000, which is $1,520. Keep an eye on the line, because wages and investment gains add up together to push you over.

Good for: For households with investment income approaching $200,000 single / $250,000 married filing jointly.

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Educational summary, not tax advice. Limits and rules change — confirm current law with your tax adviser.