Net Investment Income Tax (NIIT) is a 3.8 percent tax that applies to individuals with the income that is higher than some limits determined by the IRS. It is relevant to net investment income, i.e. capital gains, dividend, interest, rental and passive business incomes. NIIT is imposed over ordinary income tax and it is determined by the use of Form 8960. The tax structure is intended to make the high income earners pay more on the profits of investment. NIIT liability can be reduced through proper planning like capital gains management or through strategies of increasing or cutting down on investments. Knowledge of NIIT enables the taxpayers to be in control of the tax season.