Net investment income refers to the profit you make from the sale of an investment, such as a stock, or from the sale of another capital asset, such as a car. It is the amount left over after you deduct any expenses related to the investment, such as brokerage fees or commissions. This income is subject to a tax known as the net investment income tax (NIIT).
Created as part of the Health Care and Education Reconciliation Act to fund healthcare reform in 2010, the NIIT is a tax on net investment income. Those who are subject to the tax will pay 3.8 percent on the lesser of the two: their net investment income or the amount by which their modified adjusted gross income exceeds certain thresholds. For individuals, the threshold is $250,000 for married couples filing jointly and $200,000 for single filers.
The NIIT applies to various types of investment income, including but not limited to dividends, capital gains, rental and royalty income, and interest income from non-tax-exempt bonds. It does not apply to retirement account withdrawals, Social Security benefits, or tax-exempt interest.
The impact of the NIIT on your finances depends on your investment income and your income level. For example, if you have $50,000 in net investment income and your modified adjusted gross income is $300,000, you would owe $1,710 in NIIT. However, if your income falls below the threshold, you would not owe any NIIT.
Main Street Capital (MAIN) has set new quarterly records for net investment income per share, distributable net investment income per share, and net asset value per share in its latest earnings report. The business development company reported a 15 percent increase in net investment income for the first quarter of 2021 compared to the same period last year.
Main Street Capital Corporation (MSCC) is a principal investment firm primarily focused on providing customized debt and equity financing to lower middle market companies. The company has a diversified portfolio of investments across various industries, including healthcare, technology, and energy.
In its Q1 2023 results, re/insurance holding company W.R. Berkley Corporation reported that net investment income grew almost 29 percent as an increase in yields and income from alternative investments offset lower returns from fixed maturities.
The capital gains tax rate that applies to your gain depends on the type of asset, your taxable income, and how long you held the property. Short-term capital gains, or gains from assets held for one year or less, are taxed as ordinary income. Long-term capital gains, or gains from assets held for more than one year, are taxed at a lower rate, depending on your taxable income.
Total investment income increased 65 percent to $1.85 million for the quarter compared with the first quarter last year driven by strong growth in interest income and dividend income. The growth was attributed to the company's diversified investment portfolio and strategic investments in emerging markets.
This week, the Bureau of Labor Statistics (BLS) released data showing that the consumer price index (CPI) rose 0.5 percent in January, the largest increase since 2018. The CPI is a measure of inflation that tracks the prices of goods and services over time. The increase in inflation could impact investments and the economy as a whole.
