Final answer:
The tax on net investment income above a certain threshold is 3.8%. This is part of a progressive tax system wherein tax rates increase with income levels, which was further shaped by the Tax Cuts and Jobs Act of 2017.
Step-by-step explanation:
The percent of tax assessed on net investment income above a threshold is 3.8%. This tax is commonly known as the Net Investment Income Tax (NIIT) and applies to certain net investment income of individuals, estates, and trusts that have income above the statutory threshold amounts. Taxpayers with higher incomes are subject to this additional tax on their investment income, which includes, but is not limited to, interests, dividends, capital gains, rental and royalty income, and certain other passive activity income. It's important for individuals calculating their taxes to consider not only their federal income tax brackets but also additional taxes such as the NIIT they might be subject to.
The current federal income tax system in the United States is progressive, meaning as income increases, so do the tax rates. With the passage of the Tax Cuts and Jobs Act of 2017, the tax rates have been somewhat adjusted, but the system still ensures that those at the top tax brackets pay a larger share of the income tax burden. The calculations of average and marginal tax rates further aid in understanding one's total tax liability.