The Net Investment Income Tax (NIIT) is a 3.8% tax imposed on certain net investment income for individuals, estates, and trusts with income above specified thresholds. This tax applies to unearned income such as interest, dividends, capital gains, and rental income, essentially targeting higher-income earners to help fund healthcare initiatives. Understanding how the NIIT works is crucial for effective tax planning and can impact investment decisions significantly.
congrats on reading the definition of Net Investment Income Tax. now let's actually learn it.