Net investment income (NII) is a tax on certain investment income that applies to individuals, estates, and trusts. Those who are subject to the tax will pay 3.8 percent on the lesser of the two: their net investment income or the excess of their modified adjusted gross income over a specified threshold. This tax was introduced as part of the Affordable Care Act to help fund Medicare expansion and is designed to target high-income earners.
Blue Owl Capital Corporation (NYSE: OBDC) recently announced its financial results for the first quarter, highlighting a strategic focus on expanding portfolio composition with new debt investments. This approach drove total investment income growth of 12% to $2.1 million. Similarly, Stellus Capital Investment Corporation reported strong results for its first fiscal quarter, while Main Street Capital exceeded consensus expectations for distributable net investment income per share.
In a recent case, the Court of Federal Claims ruled that the Net Investment Income Tax (NIIT) is a creditable tax. This decision has significant implications for taxpayers subject to the NIIT, as it may impact their overall tax liability. Understanding how NII is calculated and how it affects your investment income is crucial for managing your finances effectively.