Even though capital gains are taxed at a lower rate, there are some acts that charge higher amounts of tax on investments like net investment income taxes.

Question

Quizplus · Accepted Answer

Net investment income taxes (NIIT) are an additional tax on investment income such as capital gains, interest income, and dividends. The NIIT is a 3.8% tax on certain types of net investment income for individuals, estates, and trusts that have income above certain threshold amounts. Therefore, even though capital gains are taxed at a lower rate, higher taxes can still be imposed on investments like net investment income taxes.

Even Though Capital Gains Are Taxed at a Lower Rate