The 3.8% net investment income tax
On top of the capital gains rates, a 3.8% tax applies to the lesser of your net investment income and the part of your income above $200,000 for a single filer or $250,000 for a married couple filing jointly. The thresholds are set in law and do not rise with inflation.
A worked example
A married couple with $150,000 of other income and a $250,000 long-term gain has $400,000 of income, $150,000 above the threshold. The tax applies to the lesser of the gain and that $150,000: $5,700.
What counts as investment income
Capital gains, interest, dividends, rents and royalties, among others; not wages, Social Security benefits or most self-employment income. Gain excluded on the sale of a main home does not count.
Source: IRS, Net Investment Income Tax. The calculator applies it. Estimates, not tax advice.
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