The IRS recently released guidance on the new IRC Section 1411 Net Investment Income Tax – HERE.

Obamacare is of course controversial but after Justice Robert’s Opinion we know that it is here to stay indefinitely.

So what is the tax effect?


  • This tax applies at a rate of 3.8%
  • It applies to individuals, estates and trusts
  • Takes effect on January 1, 2013

Who Will Owe the Tax

  • Individuals with Adjusted Gross Incomes above the following threshold amounts:

Filing Status

Threshold Amount

Married filing jointly


Married filing separately




Head of household (with qualifying person)


Qualifying widow(er) with dependent child



What types of income are subject to the tax

  • Interest Income
  • Dividends
  • Capital Gains
  • Rental Income
  • Royalty Income
  • Non-qualified annuities
  • Income trading financial instruments or commodities
  • Other passive activity income

What type of income is not subject to the tax

  •  Wages
  • Unemployment Compensation
  • Income from “active” trades or businesses.
  • Social Security
  • Alimony
  • Tax Exempt Interest
  • Self-Employment Income
  • Distributions from Qualified Retirement Plans.


This new tax is going to effect a lot of unsuspecting people.  For instance, the sale of a personal residence is subject to the tax.

It is wise to explore planning options before the end of the year.