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How Do Capital Gains Affect NIIT (Net Investment Income Tax)?

How large LTCGs impact NIIT and where to see it in Holistiplan

The MAGI (Modified Adjusted Gross Income) thresholds for purposes of calculating NIIT based on filing status are as follows:
  • $250,000 - Married Filing Jointly (MFJ), Qualified Surviving Spouse (QSS)
  • $200,000 - Single (S) or Head of Household (HOH)
  • $125,000 - Married Filing Separately (MFS)

The 3.8% net investment income tax is applied to the lesser of net investment income or to the extent a taxpayer's MAGI exceeds the applicable thresholds above.

In the instance that client's MAGI either already exceeds these thresholds or recognizing large gains pushed them into exceeding these thresholds, all or some of those gains may be subject to the additional 3.8% NIIT. 

NIIT is highlighted in it's own section and within the MAGI Tiers section on the Tax Report, in the Other Taxes and MAGI sections of the Scenario Analysis, and within our Range Calc tool. These tools and sections can help identify how NIIT is being applied. Find examples on how they appear below.

 

Tax Report


 

Scenario Analysis



 

Range Calc