Understanding NIIT in WealthTrace
Why is NIIT showing a value greater than zero when I’m below the income threshold?
The Net Investment Income Tax (NIIT) income thresholds are not indexed to inflation, similar to the income thresholds used for taxing Social Security benefits.
If your WealthTrace projections are displayed in today’s dollars, your MAGI may appear lower than the actual nominal amount used to determine whether NIIT applies.
For example, a future-year MAGI shown as $200,000 in today’s dollars could be above the applicable NIIT threshold when expressed in future, nominal dollars.
To view the actual projected MAGI used for the calculation, turn off Show Cash Flow Projections in Today’s Dollars under Plan Settings → Other.
This explains why NIIT can appear in years where the displayed MAGI seems to be below the threshold.
