Individuals who have both net investment income and modified adjust gross income of at least $200,000 ($250,000 for joint taxpayers; $125,000 for married filing separately) may be subject to this 3.8% tax. Net investment income includes items like interest, dividends, capital gains, rental and royalty income. It does not include income from sources such as wages, unemployment compensation, operating income from a non passive business, social security benefits, alimony, tax-exempt interest, and self-employment income.

This tax was retained in the 2018 tax cut signed in late December, 2017.