Final answer:
A 3.8% tax is levied on the net investment income of certain high-income taxpayers, which ties into the progressive nature of the U.S. tax system where rates increase with higher income.
Step-by-step explanation:
For years after 2012, a 3.8% tax is imposed on the net investment income of certain taxpayers when modified adjusted gross income exceeds a certain threshold. This tax is part of the overall tax schedule that U.S. taxpayers face. As depicted in various figures, as an individual's income increases, they pay more in tax, and the rate of this tax becomes steeper at higher levels of income due to the progressive nature of the U.S. tax system. After accounting for deductions and exemptions, you will find your taxable income which determines your tax bracket.
Brackets have changed over time, such as with the passage of the Tax Cuts and Jobs Act of 2017, but the principle remains the same—higher income leads to a higher tax rate. In the United States, a 3.8% tax is imposed on the net investment income of certain taxpayers when modified adjusted gross income exceeds a certain threshold. This tax, known as the Net Investment Income Tax (NIIT), was introduced as part of the Affordable Care Act in 2012.