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The basics
NIIT is a separate federal tax layer. High wages can push MAGI above the threshold, but wages themselves are not net investment income; the tax still needs investment income to attach to.
Illustrative numbers
Income over the threshold
Single-filer MAGI$230,000
Threshold$200,000
Net investment income$10,000
The smaller amount is $10,000, so modeled NIIT is $380. If investment income were $50,000, only the $30,000 MAGI excess would be exposed.
Calculation transparency
How it works in MoneyWhatIf
- 01
The model uses fixed thresholds of $200,000 for single and $250,000 for joint filing.
- 02
Taxable investment interest, modeled dividends, realized capital gains, and the net rental income Schedule E leaves standing can enter net investment income; wages and retirement withdrawals do not.
- 03
NIIT is included inside the federal tax result and is repriced after withdrawals or asset sales change the year.
Keep in mind
Model limits
The official definition includes trade-or-business, expense-allocation, and exclusion detail that the lifetime projection does not collect.
The model does not separately itemize investment expenses or passive-activity groupings.
The fixed thresholds are not inflated; this follows current law treatment in the code snapshot.
This explanation documents the planning model. It is educational, not individualized tax, legal, Medicare, or investment advice.
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Related financial terms
Plain-English definitions, with 2026 figures and worked examples, from the financial terms glossary.