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Year-End Review: Net Investment Income Tax

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The Net Investment Income Tax (“N.I.I.T.”) was added to the Code on March 30, 2010. It is imposed at a rate of 3.8% of certain net investment income (“Net Investment Income”) of individuals, estates and trusts having income above specified triggering amounts. For individuals who are calendar year taxpayers, the tax first became effective in 2013. Thus, the current tax return filing season will be the first time taxpayers feel the effect of the tax. In late 2013, the I.R.S. released final and proposed regulations for the N.I.I.T. These regulations clarify proposals that were issued on December 5, 2012. This article provides a summary of the N.I.I.T. and explains how the new regulations will affect taxpayers.


Applicable Thresholds

Individuals will owe the tax if they have Net Investment Income and also have modified adjusted gross income over the following thresholds:

Filing StatusThreshold Amount
Married Taxpayers (Joint Filing)$250,000
Married Taxpayers (Separate Filing)$125,000
Head of household (with qualifying person)$200,000
Qualifying widow(er) with dependent child$250,000

These amounts are not indexed for inflation.