New 3.8% Tax on “Net Investment Income” – IRS Issues Proposed Regulations


The Internal Revenue Service has issued Proposed Regulations under Section 1411 of the Internal Revenue Code providing guidance on the 3.8% additional tax that will be imposed beginning January 1, 2013 on the “net investment income” of certain individuals, estates and trusts. This surtax on unearned investment income was added as a part of the recently enacted health care reform laws.

Basics of the Tax

The new tax applies to individuals, estates and trusts with unearned “net investment income” in excess of certain amounts.

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