This Form 8960 2026 guide explains the IRS Net Investment Income Tax – Individuals, Estates, and Trusts. Form 8960 computes net investment income tax using the applicable income, expense and threshold rules. Investment income is not the same as every item included in adjusted gross income. The calculation can also depend on modifications and allocations that are not visible in one information-return box.
Reviewed October 31, 2026. This is an independent guide. The version and availability information below identifies the IRS documents used for this page.
What Form 8960 2026 does and who prepares it
A taxpayer covered by the net investment income tax rules uses the form to calculate that tax.
For the connected reporting route, see Form 8959. Keep the role of that document separate from the task explained on this page.
| Official form | Form 8960 |
|---|---|
| IRS title | Net Investment Income Tax – Individuals, Estates, and Trusts |
| Guide period | 2026 |
| Target version | 2026 |
| Availability | Draft — not for filing |
| Last checked | October 31, 2026 |
Get the Form 8960 2026 PDF and check its status
Use the IRS source to confirm the document before completing a real filing. The download link is a reference to the official file; it is not a statement that every copy inside the PDF may be printed and submitted. Follow any instructions about electronic filing, scannable copies, recipient copies or attachments.
Which version of Form 8960 2026 should you use?
The 2026 in the title identifies the tax year or calendar-year information addressed by this guide. For a 2026 income reporting document, the preparation or filing activity may occur in 2027. Do not change the income year simply because the calendar has changed. The exact filing or furnishing date comes from the instructions for this form and the filer circumstances. The linked target PDF is a draft. It may be used to understand the proposed layout, but it is not a form to file. Amounts or instructions still subject to completion must be checked again when the final version is released.
Records to gather for Form 8960 2026
- Interest and dividend statements.
- Capital gain records.
- Rental and pass-through information.
- Allocable expense support.
- Modified adjusted gross income calculation.
Keep a working reconciliation with these records. It should show the source of each reported item, any correction made before filing and the reason a different amount appears on a connected form. This is especially useful when a statement is corrected or a prior-year balance continues into the current calculation.
How to work through Form 8960 2026
- Confirm applicability. Start with the purpose, filer category and version of the form. Complete any eligibility or applicability question before spending time on the numerical calculation.
- Prepare the source workpapers. Gather the records listed below and reconcile their totals. Keep prior-year balances, current-year transactions and estimated payments separate where they serve different purposes.
- Complete dependent calculations first. When a line refers to another form, schedule or worksheet, finish that supporting calculation first. Preserve any classification, limitation and carryforward information.
- Follow the line sequence. Use the actual line labels and arithmetic in the applicable form. A line number from an older version may refer to something different after a revision.
- Reconcile the filing package. Check names, identifying numbers, tax periods, totals and required attachments. Then use the filing method, signature process and deadline that apply to this filer and form.
Form-specific IRS instructions and reporting details
The following points retain the operative wording of the IRS documents linked above. Read each point with its stated conditions and the applicable form version. References to another form or section describe a connected requirement; they do not mean that every reader must file every referenced document.
Reminders Digital assets. Income from transactions involving digital assets may be subject to the tax imposed on net investment income (NII) under section 1411(a), which applies in addition to other income taxes imposed under subtitle A of the Code. Schedule SE (Form 1040) income. Income taken into account in determining self-employment income subject to tax under section 1401(b) is specifically excluded from NIIT under section 1411(c)(6). This exclusion doesn’t apply to income excepted from net earnings from self-employment (NESE) under section 1402(a)(1) through 1402(a)(17). That income is subject to NIIT.
See Special Rule for Self-employed Individuals. Trade or business income subject to net investment income tax (NIIT). Form 8960, line 4a, includes total income reported on Schedules C, E, and F (Form 1040) that is potentially subject to NIIT. These instructions are based mostly on Regulations sections 1.1411-1 through 1.1411-10.
For NIIT purposes, certain items of investment income and investment expense are treated differently from regular income tax purposes. Keep all records and worksheets for the items you include on Form 8960 for the entire life of the investment to show how you figured the basis. You’ll need these records if the investment was part of a carryback or carryforward in an earlier year.
Additional reporting conditions
Application to Estates and Trusts Domestic estates and trusts. The NIIT applies to estates and trusts that have undistributed NII and adjusted gross income (AGI) in excess of the threshold amount. The NIIT is 3.8% of the lesser of: • The undistributed NII for the tax year; or • The excess, if any, of AGI (as defined in section 67(e)) over the applicable threshold amount. The applicable threshold amount is the dollar amount at which the highest tax bracket under section 1(e) begins for the tax year, as adjusted for inflation.
For tax year 2026, the threshold amount is $16,000. Exception for certain domestic trusts. The following trusts aren’t subject to the NIIT. • Trusts that are exempt from income taxes imposed by subtitle A of the Internal Revenue Code. 1. Charitable trusts and qualified retirement plan trusts exempt from tax under section 501. 2.
Charitable remainder trusts exempt from tax under section 664. • A trust or decedent’s estate in which all of the unexpired interests are devoted to one or more of the purposes described in section 170(c)(2)(B). • Trusts that are classified as “grantor trusts” under sections 671–679. • Electing Alaska Native Settlement Funds (described in section 646). • Perpetual care (cemetery) trusts (described in section 642(i)).
Calculations and supporting information
Include the gain or loss from the disposition for regular income tax purposes on Form 8960, line 5a. If you materially participated (as defined under the passive activity loss rules) in a trade or business activity of the partnership or S corporation (or one of its subsidiaries), and that activity isn’t a trade or business of trading in financial instruments or commodities, you must calculate the adjustment to report on line 5c. The adjustment described below applies only to dispositions of equity interests in partnerships and stock in S corporations.
It doesn’t apply to gain or loss recognized on, for example, indebtedness owed to the taxpayer by a partnership or S corporation.
In 2026, the regular income tax NOL remaining from 2024 has reduced the taxpayer’s income for regular income tax to $490,000. The individual can reduce NII by $55,000 (entered as a negative amount on Form 8960, line 7).
Exceptions and related reporting
Part II of Form 8960 includes deductions and modifications to NII that aren’t otherwise included in Part I. Generally, expenses associated with a passive activity trade or business, or with a trade or business of trading in financial instruments or commodities conducted through a pass-through entity, are already included on line 4a or on line 5a. Part II is used to report deductions that are predominately itemized deductions. Itemized deductions are calculated separately for purposes of figuring NII under section 1411 by identifying which deductions are properly allocable to items of gross investment income.
Section 163(d)(4)(C) describes investment expenses as deductions allowed for regular income tax purposes (other than interest) that are directly connected with the production of investment income. If these deductions are allowed for regular income tax purposes, subtract them from total investment income to figure NII. For more information on properly allocable deductions, see Regulations sections 1.1411-4(f) and (g).
Tip: If you operate a trade or business, don’t include expenses deducted on other lines of the Form 8960, such as depletion or depreciation reported on Schedules C, E, and F (Form 1040) and included on Form 8960, line 4a.
Note: See the Instructions for Schedule SE (Form 1040) for who must file a Schedule SE (Form 1040). Keep a copy of the Schedule SE (Form 1040) and the worksheet used to determine the expenses included as a modification on line 10 with your records. Don’t file the worksheet with Form 1040 or 1040-SR.
Further form details
Tip: If you don’t directly or indirectly own any interests in CFCs or PFICs and don’t exclude any foreign earned income on Form 2555, Foreign Earned Income, enter your AGI from Form 1040 or 1040-SR on Form 8960, line 13.
An individual’s bankruptcy estate enters $125,000 and uses Form 8960, lines 13–17, to compute the tax. If you’re a U.S. citizen or resident married to an NRA, your filing status is married filing separately unless you made an election under section 6013(g) or 6013(h) to file jointly with your NRA spouse. If you made a section 6013(g) or 6013(h) election to file jointly with your NRA spouse but don’t also make the joint return election for NIIT purposes, you’ll be treated as married filing separately for NIIT purposes and must use the applicable threshold amount.
See Election To File Jointly With Nonresident Spouse, earlier.
Tip: Use Form 1041, Schedule B, as a worksheet to figure the income distribution deduction for NIIT purposes. Replace line 1 with the trust’s NII reported on Form 8960, line 18a. On line 2, include both adjusted tax-exempt interest and the difference between line 1 and the trust’s NII reported on Form 8960, line 18a.
Reading the lines and boxes
These selected labels come from the linked target PDF. They are a reading aid, not a replacement for the full line instructions or a completed calculation. Match the label and document version before transferring any amount.
| Line or box | Label in the source form | What to check |
|---|---|---|
| 1 | Taxable interest (see instructions) | Check the applicable line instructions and keep the source workpaper with the return records. Transfer only the information that matches the field and reporting period. |
| 2 | Ordinary dividends (see instructions) | Follow the stated arithmetic and line references in sequence. Complete the referenced inputs first and retain the worksheet supporting the result. |
| 3 | Annuities (see instructions) | Check the applicable line instructions and keep the source workpaper with the return records. Transfer only the information that matches the field and reporting period. |
| 4a | Rental real estate, royalties, partnerships, S corporations, trusts, trades or | Check the applicable line instructions and keep the source workpaper with the return records. Transfer only the information that matches the field and reporting period. |
| 4b | Adjustment for net income or loss derived in the ordinary course of a non- | Identify the income or transaction category before entering a total. Preserve the distinction between gross amounts, adjustments and the resulting taxable or reportable figure. |
Further selected fields
| Line or box | Label in the source form | What to check |
|---|---|---|
| 4c | Combine lines 4a and 4b | Check the applicable line instructions and keep the source workpaper with the return records. Transfer only the information that matches the field and reporting period. |
| 5a | Net gain or loss from disposition of property (see instructions) | Identify the income or transaction category before entering a total. Preserve the distinction between gross amounts, adjustments and the resulting taxable or reportable figure. |
| 5b | Net gain or loss from disposition of property that is not subject to net | Identify the income or transaction category before entering a total. Preserve the distinction between gross amounts, adjustments and the resulting taxable or reportable figure. |
| 5c | Adjustment from disposition of partnership interest or S corporation stock (see | Check the applicable line instructions and keep the source workpaper with the return records. Transfer only the information that matches the field and reporting period. |
| 5d | Combine lines 5a through 5c | Check the applicable line instructions and keep the source workpaper with the return records. Transfer only the information that matches the field and reporting period. |
A practical example
A taxpayer has wages, investment distributions and a property transaction. The taxpayer identifies which items enter the net investment income calculation, checks the applicable threshold and completes the separate tax form rather than applying a rate to total receipts.
This example illustrates the order of the review. It does not assume an unverified deduction, exemption, treaty rate or final tax amount. The applicable form instructions and the actual records determine the result.
Common mistakes to avoid with Form 8960 2026
- Do not apply the tax to every dollar of gross income without checking the calculation.
- Keep deductible investment expenses subject to the relevant rules.
- Additional Medicare Tax is a different computation.
Questions about Form 8960 2026
Does receiving or downloading this form mean I must file it?
A taxpayer covered by the net investment income tax rules uses the form to calculate that tax. The form purpose and the applicable filing or furnishing conditions determine the action. Downloading a blank PDF does not itself create a filing obligation or establish eligibility for a tax benefit.
Can I file the draft PDF?
No. The linked target is marked as a draft. Use it to understand the proposed layout and prepare records, but wait for the applicable final filing version. Check the IRS source again before using any year-specific amount, worksheet or filing instruction.
What should I do if the underlying information is wrong?
Do not apply the tax to every dollar of gross income without checking the calculation. Keep the original record and the correction trail. The issuer correction process, an amended return and an updated certificate can be different procedures. Choose the process that matches the document and the actual error.
Which records should I keep with the completed form?
Retain the source documents, applicable worksheets, submitted version and filing or furnishing confirmations. For this form, the working file should include interest and dividend statements, capital gain records, rental and pass-through information. Keep continuing balances and prior-year support for as long as they remain relevant under the applicable recordkeeping rules.
Related forms and next steps
Use these guides when the connected issue applies to your records. Each page has its own purpose, reporting year and availability status.