Rental Income Tax Calculator 2026
Estimate 2026 federal tax on rental income after Schedule E expenses and depreciation, with the $25,000 passive-loss allowance and 3.8% NIIT applied.
Rental Income Tax Calculator 2026
Filing Status
Sets your 2026 brackets, your standard deduction, and the passive-loss and NIIT thresholds.
Annual Gross Rent Collected
Everything the tenant paid you, including advance rent, forfeited security deposits and any owner expense the tenant covered on your behalf (Pub. 527).
Mortgage Interest
Schedule E line 12. Rental mortgage interest is not limited by the $750,000 acquisition-debt cap that applies to a personal residence.
Property Taxes
Schedule E line 16. Property tax on a rental is a business expense, so the SALT cap that limits Schedule A deductions does not apply to it.
Insurance, Repairs, Management
The rest of Schedule E lines 5 to 19: insurance, repairs and maintenance, management fees, advertising, utilities, HOA dues, legal fees and travel. Capital improvements do not belong here.
Annual Depreciation
Building basis divided by the residential recovery period.
Other Household Income
Wages, self-employment profit, interest and everything else before this rental. It sets your starting bracket and drives the passive-loss phase-out. Type a negative number if you have a business loss.
Active Participation
Active participation means you make management decisions such as approving tenants, setting rent terms and approving repairs. The bar is far lower than material participation, but miss it and the whole loss gets suspended no matter how low your income is.
Federal estimates only, not tax or legal advice. State income tax on rental income is not modeled, and neither is the Section 199A QBI deduction, depreciation recapture on sale, at-risk limits under Section 465, or the Section 280A vacation-home rules. Check your figures with a tax professional before filing.
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How rental income is taxed in 2026
Most rental calculators ask you for your tax rate. This one works it out, bracket by bracket, with the passive-loss rules that actually decide whether a rental loss helps you this year.
There is no special rental tax rate. You report the property on Schedule E, subtract mortgage interest, property taxes, insurance, repairs, management fees and depreciation from the gross rent, and the net figure stacks on top of your other income. It is then taxed at the ordinary 2026 rates of 10% through 37%. Because it stacks, the first dollar of rental profit is taxed at whatever bracket your wages already reached. That is why this tool runs the tax twice, once with the rental and once without, and shows you the gap.
Rental income is not subject to self-employment tax. IRC Section 1402(a)(1) excludes rents from real estate from net earnings from self-employment. Nor does it get capital gains rates while you still own the property. The 2026 standard deduction of $16,100 for single and married filing separately, $32,200 for married filing jointly and $24,150 for head of household is applied on both sides of the comparison, so the answer reflects your real starting position.
The One Big Beautiful Bill Act (P.L. 119-21) reshaped brackets, deductions and several credits for 2026, but it left the rules that matter most to landlords untouched: Section 469 passive activity losses, Section 1411 net investment income tax, and the 27.5-year residential recovery period in Section 168(c).
The $25,000 passive loss allowance and what happens to the rest
Rental activity is passive by default under Section 469, which normally means a rental loss can only offset passive income, not your salary. Section 469(i) carves out an exception: if you actively participate, you can deduct up to $25,000 of rental losses against ordinary income. Active participation means making management decisions such as approving tenants, setting rent terms and approving repairs. No hammer swinging required, and none of the 500 hours that material participation demands.
The catch is the phase-out. The $25,000 drops by $0.50 for every $1 of modified AGI above $100,000, which zeroes it out at $150,000. Congress never indexed that figure for inflation. It has sat at the same level since 1986 and covers fewer landlords every year.
Take the textbook case. Single filer, $120,000 of other income, a $20,000 rental loss. The reduction is ($120,000 minus $100,000) times 0.5, which is $10,000, leaving an allowance of $15,000. You deduct $15,000 this year and $5,000 is suspended. Push that same filer to $160,000 of income and the reduction becomes $30,000, the allowance floors at $0, and the entire $20,000 loss suspends. The property cost you real money and saved you nothing in tax this year.
Married filing separately gets its own rules under Section 469(i)(5). If you lived apart from your spouse for the whole year, your cap is $12,500 with a $50,000 to $75,000 phase-out. If you lived together at any point during the year, the allowance is $0 regardless of income. This calculator asks the living-apart question directly rather than leaving it as a footnote.
Suspended losses are not lost. Form 8582 tracks the balance and carries it forward with no expiry. It gets released against future passive income, or all at once when you dispose of the entire activity in a fully taxable sale to an unrelated party under Section 469(g).
Depreciation: the deduction that shrinks your rental tax bill
Depreciation is the reason a rental that puts cash in your pocket every month can still show a loss on your return. Subtract the land value from your purchase price plus capitalized closing costs, then write off the remaining building basis over 27.5 years on a straight line under Section 168(c). Land is never depreciated. The mid-month convention in Section 168(d)(2) governs the first and last years, so a property placed in service in July gets 5.5 months in year one.
On a $330,000 purchase with $80,000 allocated to land, the building basis is $250,000 and the annual deduction is about $9,090. Against $30,000 of rent and $19,000 of cash expenses, that turns a $11,000 cash profit into a $1,910 paper profit, and a slightly higher expense year flips it to a loss. That is timing, not a loophole. This calculator takes your annual depreciation as a direct dollar input, so pull the figure off your depreciation schedule.
The bill arrives on sale. Depreciation you claimed reduces your basis, and the portion of your gain attributable to it becomes unrecaptured Section 1250 gain, taxed at up to 25% under Section 1(h)(1)(E). Worse, the recapture applies to depreciation you were allowed to take whether or not you actually claimed it, so skipping the deduction buys you nothing. This tool does not model recapture.
When rental income triggers the 3.8% net investment income tax
Section 1411 adds a 3.8% surtax on the lesser of your net investment income or the amount your modified AGI exceeds $200,000 (single or head of household), $250,000 (married filing jointly) or $125,000 (married filing separately). Those thresholds are statutory and, like the passive-loss allowance, frozen against inflation.
Rental income is presumptively net investment income under Section 1411(c)(1)(A)(i), because it is passive. It escapes the surtax only when it comes out of a Section 162 trade or business that is non-passive to you. In practice that means real estate professional status under Section 469(c)(7), or one of the self-rental and grouping exceptions. Because the lesser-of rule caps the surtax at your MAGI excess, a landlord who is $3,000 over the threshold with $40,000 of rental profit owes 3.8% of $3,000, not of $40,000.
The figure this tool shows is exposure on a single property, not a finished Form 8960. Your other investment income (interest, dividends, capital gains, royalties) feeds the same calculation. Run the full picture in the NIIT Calculator, and if your rental might qualify as a trade or business, check the Section 199A angle in the QBI Deduction Calculator as well.
Everything on this page is an estimate, not tax or legal advice. Check it against IRS Publications 527 and 925 and your own records, and talk to a tax professional before you file.
Frequently Asked Questions
Common questions about rental income tax calculator 2026
How much tax do I pay on rental income?
You pay ordinary income tax rates of 10% to 37% on your net rental income, not on the gross rent you collected. Net rental income is the Schedule E figure left after mortgage interest, property taxes, insurance, repairs, management fees and depreciation. Rental income is not subject to self-employment tax under IRC Section 1402(a)(1), but high earners may owe the 3.8% net investment income tax on top of the ordinary rate. See the Tax Bracket Calculator for the bracket your rental profit lands in.
What expenses can I deduct against rental income?
IRS Publication 527 allows mortgage interest, property taxes, insurance, repairs and maintenance, property management fees, advertising, utilities you pay, legal and professional fees, travel to the property, HOA dues and depreciation. Rental property taxes go on Schedule E line 16 and are not subject to the SALT cap that limits personal property taxes on Schedule A. Capital improvements are not deducted in the year you pay for them. They get added to basis and depreciated instead.
What is the $25,000 passive loss allowance, and do I qualify?
IRC Section 469(i) lets an individual who actively participates in a rental deduct up to $25,000 of passive rental losses against wages and other non-passive income. Active participation is a low bar. Approving tenants, setting rents, signing off on expenses. It is not the same thing as material participation. The allowance drops by $0.50 for every $1 of modified AGI above $100,000, so it reaches $0 at $150,000. For married filing separately the cap is $12,500 with a $50,000 to $75,000 phase-out, and only if you lived apart from your spouse for the entire year. Living together for any part of the year means the allowance is $0.
What happens to a rental loss I cannot deduct this year?
It is suspended, not lost. Form 8582 tracks the disallowed portion and carries it forward with no expiry date. Suspended losses are freed in a later year against passive income from the same or another passive activity, and the entire remaining balance is released in full when you dispose of the whole activity in a fully taxable transaction to an unrelated party under IRC Section 469(g).
How is rental property depreciation calculated?
Take the purchase price plus capitalized closing costs, subtract the value of the land (land is never depreciated), and divide the remaining building basis by 27.5 years for residential rental property under IRC Section 168(c). The first and last years use the mid-month convention, so a property placed in service in July gets 5.5 months of depreciation, not 6. This calculator asks you for the annual depreciation figure directly instead of working it out from basis.
Do I owe the 3.8% net investment income tax on rental income?
Usually yes, if the rental is passive to you and your modified AGI exceeds $200,000 (single or head of household), $250,000 (married filing jointly) or $125,000 (married filing separately). The 3.8% applies to the lesser of your net investment income or your MAGI over the threshold. Rental income escapes NIIT only when it comes from a Section 162 trade or business that is non-passive to you. In practice that means real estate professional status under Section 469(c)(7), or one of the self-rental and grouping exceptions. Run the full Form 8960 lesser-of computation in the NIIT Calculator.
Does the QBI deduction apply to rental income?
It can. If the rental activity rises to a Section 162 trade or business, or you meet the Revenue Procedure 2019-38 safe harbor (250 or more hours of rental services per year, separate books and records, and contemporaneous time logs), the net rental income may support a Section 199A deduction of up to 20%. This calculator leaves that deduction out on purpose, so the tax figure here errs on the high side. Model it separately in the QBI Deduction Calculator.
What happens to depreciation when I sell the property?
Depreciation you claimed, plus depreciation you were allowed to claim but skipped, reduces your basis. All of it comes back as gain when you sell. The portion attributable to depreciation is unrecaptured Section 1250 gain, taxed at a rate of up to 25% under IRC Section 1(h)(1)(E), with the rest taxed at long-term capital gains rates and possibly hit by NIIT as well. None of that is modeled here. Estimate the sale side with the Capital Gains Tax Calculator.