Form 8960 – Net Investment Income Tax (NIIT)
Last reviewed: 2025-10-26
Use the IRS Form 8960: Investment Income Surtax Tax Form Calculator IRS Form 8960: Investment Income Surtax as a stand alone tax form calculator to quickly calculate specific amounts for your 2026 8960 state tax return. Alternatively, you can use one of our Combined Federal and State Tax Estimators to quickly calculate your salary, tax, and take-home pay.
Form 8960 calculates the 3.8% Net Investment Income Tax (NIIT) for individuals, estates, and trusts with income above certain thresholds. This surtax applies to passive income such as interest, dividends, capital gains, rental income, and income from businesses in which the taxpayer does not materially participate.
Who must file Form 8960? You must complete this form if:
- You have net investment income and your modified adjusted gross income (MAGI) exceeds:
- $250,000 for Married Filing Jointly
- $125,000 for Married Filing Separately
- $200,000 for Single, Head of Household, or Qualifying Widow(er)
The tax is 3.8% on the lesser of net investment income or the excess of MAGI over the applicable threshold.
| Part I. Investment Income | | ||||||
| 1 | 1 | ||||||
| 2 | 2 | ||||||
| 3 | 3 | ||||||
| 4a | 4a | ||||||
| b | 4b | ||||||
| c | 4c | ||||||
| 5a | 5a | ||||||
| b | 5b | ||||||
| c | 5c | ||||||
| d | 5d | ||||||
| 6 | 6 | ||||||
| 7 | 7 | ||||||
| 8 | 8 | ||||||
| Part II. Investment Expenses Allocable to Investment Income and Modifications | |||||||
| 9a | 9a | ||||||
| b | 9b | ||||||
| c | 9c | ||||||
| d | 9d | ||||||
| 10 | 10 | ||||||
| 11 | 11 | ||||||
| Part III. Tax Computation | |||||||
| 12 | 12 | ||||||
| Individuals: | |||||||
| 13 | 13 | ||||||
| 14 | 14 | ||||||
| 15 | 15 | ||||||
| 16 | 16 | ||||||
| 17 | 17 | ||||||
| Estates and Trusts: | |||||||
| 18a | 18a | ||||||
| b | 18b | ||||||
| c | 18c | ||||||
| 19a | 19a | ||||||
| b | 19b | ||||||
| c | 19c | ||||||
| 20 | 20 | ||||||
| 21 | 21 | ||||||
What counts as net investment income? It includes:
- Interest and dividends (including qualified dividends)
- Capital gains (including gains from the sale of property not used in a trade or business)
- Rental and royalty income
- Income from passive activities
- Income from financial instruments and commodities
Excluded: wages, unemployment compensation, active business income, tax-exempt interest, and distributions from certain qualified plans.
Last reviewed: 2025-10-26: If you believe this form requires an update, please contact us.
Tips to reduce or manage NIIT liability
Here are strategies high-income earners can consider to limit NIIT exposure:
- Invest in tax-exempt bonds or municipal interest to reduce net investment income.
- Harvest capital losses to offset capital gains.
- Defer capital gains through 1031 exchanges or qualified opportunity funds.
- Review passive vs. active participation in partnerships to exclude business income from NIIT.
- Use retirement contributions to lower your MAGI below the NIIT threshold.
Use our Form 8960 calculator to simulate your NIIT exposure. For more details, consult the official instructions and verify each type of income against IRS guidance.
Frequently Asked Questions
Why does FICA change during the year?
Social Security stops at the wage cap, while Medicare continues all year.
How can I plan long-term after-tax savings growth?
How are estates handled federally?
Use Form 706 (and related schedules) for estate tax modeling.
What investment return do I need to hit a savings goal?
Use CAGR or Compound Interest.
Important Notes
All calculations are estimates for guidance only. Always review your return and consider professional advice when submitting official filings.