Net investment income tax

The net investment income tax has been under the radar for many taxpayers since it was first introduced in 2013. The tax is a surtax that is usually paid by high-income taxpayers with larger investment incomes. Single taxpayers with investment income and MAGI bigger than $200,000 and married joint taxpayers with MAGI over $250,000 could be subject to a certain surtax of 3.8% on net investment income.

This could also include capital gains, interest, dividends, rental income, royalties, and nonqualified annuity income. The net investment income tax might increase the 15% and 20% long-term capital gains tax rates by 3.8% for all taxpayers who earn more.