The Hidden Tax That Eats Your Early Retirement

Episode 10 of The Financial Freedom Podcast with Fexingo explores a stealthy threat to early retirement: the net investment income tax, or NIIT. Lucas and Luna unpack how this 3.8 percent surtax applies to passive income like capital gains, dividends, and rental income for single filers earning over $200,000 or couples over $250,000. They walk through a real example: a couple with $1.5 million in taxable brokerage assets who plan to withdraw $60,000 a year. At first glance, their withdrawals seem tax-free in the 0 percent capital gains bracket. But when you add in a part-time consulting gig or a small business sale, NIIT can silently strip thousands. The hosts also discuss strategies like Roth conversions, tax-loss harvesting, and municipal bonds to mitigate the hit. The episode closes with a look at how NIIT interacts with the 3.8 percent additional Medicare tax on earned income — a one-two punch many early retirees miss. No scare tactics, just clear math and practical planning. #EarlyRetirement #NetInvestmentIncomeTax #NIIT #TaxPlanning #FinancialIndependence #FIRE #PassiveIncome #CapitalGains #RetirementWithdrawals #RothConversion #TaxLossHarvesting #MunicipalBonds #MedicareTax #PersonalFinance #WealthManagement #FexingoBusiness #BusinessPodcast #TheFinancialFreedomPodcast Keep every episode free: buymeacoffee.com/fexingo