RaifH
Expert Alumni

Investors & landlords

The article refers to the NIIT as a "surtax," which is a tax on top of the tax. The capital gains rates are correct, you are just also hit with the NIIT once your gross income exceeds $250,000 for joint filers.  

 

It's not quite accurate just to say MFJ $500k is subject to a 23.8% capital gains tax because it depends on the source of their income. If they make $100k in wages and $400k in capital gains, then 150k of capital gains will be at the capital gains rate and 250k will be at capital gains + NIIT. If they make $400k in wages and $100k in capital gains, then all $100k will be at capital gains + NIIT. That's why the NIIT is off-the-charts, or a surtax, or however you want to refer to it.