What percentage is the net investment income tax?

The net investment income tax is set at a rate of 3.8%. This tax was introduced as part of the Affordable Care Act and applies to the investment income of individuals, estates, and trusts with income above specified thresholds. The tax is calculated on the lesser of net investment income or the amount by which modified adjusted gross income exceeds those thresholds.

The 3.8% rate specifically targets various forms of passive income, including interest, dividends, capital gains, and rental income, providing a means for the government to generate additional revenue from higher-income earners. Understanding this rate is crucial for individuals who have significant investment income, as it directly affects their overall tax liability.

In contrast, other percentages listed are not applicable for this specific tax, as they do not represent the established rate for net investment income.