The National Directory of Certified Public Accountants

Ask A CPA - 2018 Tax Law Changes

2018 - Net Investment Income Tax - 3.8%

The 3.8% Net investment income tax that applies to high earners stays the same, with identical thresholds. If you have net investment income (NII), some or all of it will be subject to a 3.8% tax if you have modified adjusted gross income (MAGI) exceeding the applicable threshold. The same $250,000, $200,000 or $125,000 thresholds for the tax also applies to the tax on NII except for qualifying widows/widowers, who are treated as married persons filing jointly for purposes of the 3.8% tax. If MAGI exceeds the threshold, the 3.8% tax applies to the lesser of your NII or the MAGI exceeding the threshold.

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