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Does the Net Investment Income Tax apply to my RSUs?

NIIT generally applies to net investment income, not RSU wages at vest. but later sales and dividends can matter.

Rates and rules change. Check the tax year and last-reviewed date on each page, then confirm against IRS or state guidance before you file.

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The Net Investment Income Tax (NIIT) generally applies to investment income, like , dividends, and interest, for higher-income taxpayers, not to wage income at . But selling shares after can create that may be subject to NIIT.

Why this happens

NIIT is a surtax on net investment income above income thresholds set by the IRS. Wages are not investment income, so the itself is generally outside NIIT.

When you sell shares after , any is investment income and can count toward NIIT if your income is high enough.

Dividends on shares you hold are also investment income for this purpose.

So with , NIIT is mostly a 'what happens after I hold and sell' question, not a 'what happens at ' question.

What to check

  • Whether you sold shares after and realized .
  • Dividends received on shares you held.
  • Your modified adjusted gross income relative to the IRS thresholds for the year.
  • How NIIT differs from additional Medicare tax (investment income vs. wages).
  • Whether holding period made gains short- or long-term.

Common mistake

Worrying that NIIT applies to the itself. income is wages, not investment income. NIIT generally enters the picture later, when you sell appreciated shares or receive dividends.

Example scenario (hypothetical)

Illustration only, not your tax situation.

Example: Taylor vests shares (wages, no NIIT) and holds them. A year later Taylor sells at a gain. If Taylor's income is above the NIIT threshold, that , not the original , may be subject to the surtax.

When to get help from a tax pro

  • You have large from selling appreciated shares.
  • Your income is near the NIIT thresholds.
  • You hold dividend-paying company stock.
  • You want to coordinate sales across tax years.

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For learning, not filing

Grants, employers, and states all differ. Use your own documents and a qualified tax professional before you make decisions from this guide.