What is the Investment Income Tax?

The Investment Income Tax, formally known as the Net Investment Income Tax (NIIT), is a 3.8% tax on certain investment income for individuals with modified adjusted gross income above specific thresholds. Established by the Affordable Care Act, this tax applies to income from interest, dividends, capital gains, rental income, and passive business activities, helping fund Medicare expansion and healthcare reforms.

Why the investment income tax matters

• Funds healthcare programs: Generates revenue for Medicare and ACA initiatives
• Affects high-income taxpayers: Applies only above specific income thresholds
• Influences investment decisions: May impact tax planning strategies for affected individuals

How Solace can help

A Solace advocate can help you understand how the investment income tax relates to healthcare funding, though specific tax planning should be discussed with a qualified tax professional. Advocates can explain how these tax revenues support various healthcare programs you may utilize.