How the Net Investment Income Tax Hits Your Passive Gains

In this episode of The Tax Strategy Podcast, Lucas and Luna break down the Net Investment Income Tax (NIIT) — a 3.8% surtax that catches many investors off guard. They use a concrete example: a married couple filing jointly with $300,000 in wage income and $80,000 in capital gains and rental income. Lucas explains how the NIIT applies to the lesser of net investment income or the excess modified adjusted gross income over the $250,000 threshold. They walk through the calculation step by step, discuss what counts as investment income (including rental income from a passive activity) and what doesn't (like wages and capital gains from an active trade or business). Luna challenges Lucas on why the NIIT seems like a stealth tax and how it interacts with other provisions. They also touch on strategies to reduce exposure, such as investing in tax-exempt municipal bonds or adjusting the timing of gains. By the end, listeners will understand exactly how the NIIT works and whether they may be affected. #NetInvestmentIncomeTax #NIIT #PassiveIncome #CapitalGains #TaxSurtax #MedicareTax #InvestmentIncome #RentalIncome #MarriedFilingJointly #TaxStrategy #WealthManagement #FinancialPlanning #TaxEfficiency #PassiveActivity #TaxPlanning #Business #FexingoBusiness #BusinessPodcast Keep every episode free: buymeacoffee.com/fexingo