{"id":175798,"date":"2020-09-09T18:41:00","date_gmt":"2020-09-09T22:41:00","guid":{"rendered":"https:\/\/ibkrcampus.com\/trading-lessons\/net-investment-income-tax\/"},"modified":"2026-06-26T14:52:21","modified_gmt":"2026-06-26T18:52:21","slug":"net-investment-income-tax","status":"publish","type":"trading-lessons","link":"https:\/\/www.interactivebrokers.com\/campus\/trading-lessons\/net-investment-income-tax\/","title":{"rendered":"Net Investment Income Tax"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\"><strong>New to Interactive Brokers?<\/strong><\/p>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button has-custom-width wp-block-button__width-50\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/ndcdyn.interactivebrokers.com\/mkt\/?src=taUSTAXAcc&amp;url=%2FUniversal%2FApplication\" target=\"_blank\" rel=\"noreferrer noopener\">Open Account<\/a><\/div>\n<\/div>\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n<h3>History<\/h3>\nThe Net Investment Income Tax (or NII) is not truly a tax &#8211; at least not in the purest sense of the word.\nEnacted as part of the Affordable Care Act, the intent was to have higher income taxpayers pay an\nadditional 3.8% tax to offset the costs of the coverage now required under the act.\n<h4>What is &#8220;higher income&#8221;?<\/h4>\nHigher income taxpayers are those with modified adjusted gross income in excess of $250,000 for\nmarried filing jointly taxpayers or $200,000 for single taxpayers. Modified adjusted gross income, as a\nsimple definition, is income before itemized or standard deductions and any exemptions.\n\nUnlike most tax thresholds the starting point for the assessment of NII is fixed and does not adjust with\ninflation.\n<h4>What income is subject to the tax?<\/h4>\nThe additional 3.8% tax is assessed on:\n\u2022 Interest\n\u2022 Dividends (including qualified dividends)\n\u2022 Rents\n\u2022 Royalties\n\u2022 Income from passive activities such as rental real estate\n\u2022 Gains from the sale of most properties and all securities.\n<h4>Special Considerations for Partners\/Business<\/h4>\nIf you are part of an operating business that generates interest as part of its ordinary course of business\n&#8211; that is considered business income that is not passive and not subject to NII. Interest, dividends and\ncapital gains generated by investments made by the business is subject to NII.\n<h4>Consider it this way:<\/h4>\n\u2022 income from operations &#8211; no NII\n\u2022 income from investment \u2013 yes NII.\n\u2022 Passive income &#8211; &#8211; yes NII\n\n&nbsp;","protected":false},"excerpt":{"rendered":"<p>The main topics of this lesson are: Net Investment Income Tax; What is &#8220;higher income&#8221;?; What income is subject to the tax?; and Special Considerations for Partners\/Business. 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