# How much is my rental income tax?

Estimates the 2026 federal tax on rental property income: rent less expenses and 27.5-year depreciation, the $25,000 passive loss allowance, and the tax at your rates from the site’s tax engine.

- Page: https://www.acalculator.org/finance/rental-income-tax-calculator
- JSON spec: https://www.acalculator.org/finance/rental-income-tax-calculator.json
- Version: 885c7836b94c

## Default answer

Example with the default inputs (Rent received in 2026 $30,000.00, Mortgage interest (optional) $9,000.00, Property taxes (optional) $3,500.00, Other expenses (optional) $5,500.00, Building cost, not land (optional) $220,000.00, Placed in service Before 2026, Filing status Single, Other income $90,000.00, You actively participate Yes): Net rental income of $4,000.80 changes your 2026 federal tax by $880.00.

## Inputs

| Key | Label | Description |
| --- | --- | --- |
| rent | Rent received in 2026 | All rent you received for the year, including advance rent and fees tenants paid. |
| mortgage | Mortgage interest (optional) | Interest on the loan for the rental property. |
| taxes | Property taxes (optional) | Real estate taxes on the rental property. |
| costs | Other expenses (optional) | Insurance, repairs, management fees, HOA dues, utilities, advertising and other rental costs you paid. |
| basis | Building cost, not land (optional) | What you paid for the building (plus improvements), not counting the land, for depreciation. |
| start | Placed in service | When you first had the property ready to rent; it sets the first year of depreciation. |
| status | Filing status | Your 2026 federal filing status. |
| income | Other income | Your other 2026 income before deductions, such as wages; it sets your tax rate. |
| active | You actively participate | You own at least 10% and make management decisions such as approving tenants; needed to deduct a loss. |
| apart | Lived apart from your spouse all year | Married filing separately can deduct a rental loss only after living apart all year. |

## Outputs

| Key | Label | Description |
| --- | --- | --- |
| tax | Federal tax on the rental | Federal tax with the rental minus without it; below $0 when a loss saves tax. |
| net | Net rental income | Rent − mortgage interest − property taxes − other expenses − depreciation; below $0 is a loss. |
| depreciation | Depreciation | Building cost × the 2026 percent: by the month placed in service, or 3.636% for a full year. |
| onReturn | Rental income on your return | Net rental income, or minus the part of a loss the allowance lets you deduct. |
| suspended | Loss carried to 2027 | The part of a loss above the allowance; it waits for rental income or a sale. |
| allowance | Special allowance | Up to $25,000 of rental loss, less 50% of modified AGI over $100,000 ($12,500 and $50,000 apart). |
| rate | Marginal tax rate | The federal rate on the next dollar of income, with the rental. |
| niit | Net investment income tax part | The 3.8% net investment income tax the rental income adds. |

## Method

Net = rent − mortgage interest − property taxes − other expenses − building cost × the 2026 depreciation percent. A loss is deductible up to $25,000 − 50% × (modified AGI − $100,000), not below $0; the rest carries over. Tax = 2026 Form 1040 tax with the rental income or allowed loss − without it.

## Assumptions

- Tax year 2026, one residential rental held for rent all year, on Schedule E. Amounts up to $1 trillion.
- Other income is ordinary income with the standard deduction and no credits, and is your modified AGI for the allowance.
- Depreciation: Table 2-2d, 3.636% a year after the first (from year 10 the table alternates 3.636% and 3.637%). Not a real estate professional; no losses carried from earlier years. An estimate, not tax advice.

## Worked examples

1. rent = $30,000.00, mortgage = $9,000.00, taxes = $3,500.00, costs = $5,500.00, basis = $220,000.00, start = before, status = single, income = $90,000.00 gives depreciation = $7,999.20, net = $4,000.80, onReturn = $4,000.80, tax = $880.00, rate = 22%, niit = $0.00. Source: IRS Publication 527 (2025), chapters 2 and 5, https://www.irs.gov/publications/p527 (3.636% a full year); the 2026 Form 1040 tax with the rental − without it (IRS Rev. Proc. 2025-32; Form 8960).
2. rent = $18,000.00, mortgage = $12,000.00, taxes = $4,000.00, costs = $6,000.00, basis = $275,000.00, start = before, status = mfj, income = $120,000.00, active = yes gives net = -$13,999.00, allowance = $15,000.00, onReturn = -$13,999.00, suspended = $0.00, tax = -$1,680.00, rate = 12%. Source: IRS Publication 925 (2025), special $25,000 allowance, https://www.irs.gov/publications/p925; IRS Publication 527 (2025), chapters 2 and 5, https://www.irs.gov/publications/p527; the 2026 Form 1040 tax with the rental − without it (IRS Rev. Proc. 2025-32; Form 8960) (12% bracket).
3. rent = $18,000.00, mortgage = $12,000.00, taxes = $4,000.00, costs = $6,000.00, basis = $275,000.00, start = before, status = single, income = $140,000.00, active = yes gives allowance = $5,000.00, onReturn = -$5,000.00, suspended = $8,999.00, tax = -$1,200.00, rate = 24%. Source: IRS Publication 925 (2025), special $25,000 allowance, https://www.irs.gov/publications/p925 (25,000 − 50% × 40,000 = 5,000); the 2026 Form 1040 tax with the rental − without it (IRS Rev. Proc. 2025-32; Form 8960) (24% bracket).
4. rent = $24,000.00, mortgage = $0.00, taxes = $2,000.00, costs = $3,000.00, basis = $165,000.00, start = 4, status = single, income = $60,000.00 gives depreciation = $4,250.40, net = $14,749.60, tax = $2,587.00. Source: IRS Publication 527 (2025), chapters 2 and 5, https://www.irs.gov/publications/p527 (Table 2-2d, April: 2.576%).

## FAQ

### How do you calculate tax on rental income?

Start with the rent you received, take off your rental expenses (mortgage interest, property taxes, insurance, repairs, management) and depreciation of the building. The result is your net rental income, which is taxed at your ordinary rates on top of your other income, plus the 3.8% net investment income tax at higher incomes. $30,000 of rent, $18,000 of expenses and $7,999.20 of depreciation leaves $4,000.80, which adds $880 of tax in the 22% bracket.

### How is rental property depreciated?

A residential rental building (not the land) is depreciated over 27.5 years by the straight-line method with the mid-month convention. In a full year that is 3.636% of the building’s cost; in the first year it depends on the month you placed it in service, from 3.485% for January down to 0.152% for December.

### Can I deduct a rental loss?

Rental losses are passive, but if you actively participate (you own at least 10% and make management decisions such as approving tenants) you can deduct up to $25,000 a year against other income. That allowance falls by 50 cents for each dollar of modified AGI over $100,000 and is gone at $150,000. The rest of the loss carries forward until you have rental income or sell.

### What about married couples filing separately?

If you lived with your spouse at any time during the year, you get no special allowance. If you lived apart all year, the allowance is $12,500, falling by 50% of modified AGI over $50,000.

### Which rental expenses are deductible?

Mortgage interest (not principal), property taxes, insurance, repairs and maintenance, management fees, HOA dues, utilities you pay, advertising, travel to the property and legal or tax fees. Improvements that add value or extend the property’s life are depreciated instead of deducted at once.

### Do I pay self-employment tax on rental income?

No. Rent from real estate reported on Schedule E is not subject to self-employment tax, unless you provide substantial services to tenants, such as a hotel or a bed and breakfast does.

### Is rental income subject to the net investment income tax?

Yes, unless you are a real estate professional in that rental business. The 3.8% tax applies to the smaller of your net investment income and your modified AGI over $200,000 ($250,000 married filing jointly).

## Sources

- IRS, Publication 527 (2025), Residential Rental Property: rental income and expenses, depreciation over 27.5 years with the straight line method and the mid-month convention (Table 2-2d: for example February 3.182%, May 2.273%, August 1.364% in year 1, and 3.636% in later years), and the special $25,000 allowance for active participation ($12,500 married filing separately and living apart; reduced by 50% of modified AGI over $100,000, $50,000 separately). https://www.irs.gov/publications/p527 (retrieved 2026-10-19)
- IRS, Publication 925 (2025), Passive Activity and At-Risk Rules: the special $25,000 allowance and how modified AGI is figured for it. https://www.irs.gov/publications/p925 (retrieved 2026-10-19)
- IRS, Topic no. 414, Rental income and expenses (reviewed 24-Sep-2026). https://www.irs.gov/taxtopics/tc414 (retrieved 2026-10-19)
- IRS, Rev. Proc. 2025-32 (Internal Revenue Bulletin 2025-45): 2026 rate tables (section 4.01) and standard deduction (section 4.14). https://www.irs.gov/irb/2025-45_IRB (retrieved 2026-10-19)
- IRS, Instructions for Form 8960 (2025): 3.8% net investment income tax over $200,000 of modified AGI ($250,000 joint and qualifying surviving spouse, $125,000 married filing separately); rental income is investment income. https://www.irs.gov/instructions/i8960 (retrieved 2026-10-19)
- IRS, 2025 Tax Table (Instructions for Form 1040): taxable income under $100,000 is taxed at the middle of its row (rows of $0 to $5, $5 to $15 and $15 to $25, then $25 rows up to $3,000 and $50 rows from $3,000), in whole dollars. https://www.irs.gov/instructions/i1040tt (retrieved 2026-10-19)