# Net Investment Income Tax

*Taxes — Finicade finance glossary*

The net investment income tax adds 3.8% on investment income — interest, dividends, capital gains, rents — for taxpayers above a MAGI threshold. Its thresholds are not indexed to inflation, so it reaches more households every year by design. It stacks on top of capital gains rates, which is why the true top US rate on long-term gains is 23.8% rather than the headline 20%.

**Also known as:** NIIT, 3.8% surtax, Medicare surtax on investments

**Related terms:** [Modified Adjusted Gross Income (MAGI)](https://finicade.com/glossary/modified-adjusted-gross-income), [Capital Gains Tax](https://finicade.com/glossary/capital-gains-tax), [Dividend](https://finicade.com/glossary/dividend), [Taxable Income](https://finicade.com/glossary/taxable-income), [Marginal Tax Rate](https://finicade.com/glossary/marginal-tax-rate)

Source: https://finicade.com/glossary/net-investment-income-tax