Have you had a good year investing? There’s a potential federal income tax downside: You could get hit with the often-overlooked “net investment income tax” (NIIT).

Strategy: Act now to reduce or eliminate the NIIT. The sooner you address the potential tax consequences for 2024, the better. Furthermore, some steps for cutting down the NIIT can do “double tax duty” on your return.

Here’s the whole story: The 3.8% NIIT applies to the lesser of your NII or your excess modified adjusted gross income (MAGI) above an annual threshold of $200,000 for single filers and $250,000 for joint filers. For this purpose, NII includes typical investment income items like interest and dividends, capital gains and gains from investments in passive activities. Certain other items—such as IRA and qualified retirement plan distributions and income from an active business—don’t count as NII. Accordingly, you should consider moves that would reduce your exposure to the NIIT in 2024, especially if they would also lower your MAGI for other tax purposes. Here are seven ideas to consider:

1. Add munis to your portfolio. The interest income from municipal bonds (“munis” for short) is generally exempt from all federal income taxes, including the NIIT. So this is a win-win for certain investors. Tip: Consider all the investment aspects—not just taxes.

2. Postpone large capital gains. This includes sales of securities that will produce short-term gains that would be taxed at higher ordinary income rates. At the very least, consider waiting until a gain will qualify as lower-taxed long-term capital gain. Tip: The maximum federal longterm capital gains tax rate is 20%, but most investors won’t pay more than 15%.

3. Harvest capital losses. Similarly, you may sell securities that will produce capital losses. The losses can offset capital gains plus up to $3,000 of ordinary income. Any excess loss is carried over to next year. Tip: This is especially beneficial if the loss sale offsets high-taxed short-term gains.

4. Arrange real estate installment sale. If proceeds are received over two or more years, only a portion of your gain from a real property sale is taxable in the year of the sale. The remainder is taxable in future years as sales proceeds are received. Thus, you benefit from tax deferral as well as reducing your NIIT exposure. Tip: By spreading out the taxable gain over several years, your total tax hit might be lower because more of the gain might be taxed at 15% instead of 20%.

5. Convert traditional IRA into Roth. There’s a one-time current taxable income hit that will increase your MAGI for the conversion year, but future qualified Roth IRA payouts are tax-exempt and won’t increase your MAGI in those years. However, consult your tax advisor before pulling the trigger on a Roth conversion to make sure it make sense for you. Tip: Remember that taxable traditional IRA distributions don’t count as NII, but they do increase your MAGI.

6. Swap real estate property. If the deal qualifies as a like-kind exchange under Section 1031 of the tax code, there’s no current tax liability except to the extent you receive “boot.” Note: You must meet certain timing requirements. Tip: 1031 exchanges are limited to real property swaps.

7. Defer self-employment income. If you’re a self-employed individual, you might postpone taxable income to 2025 to lower your 2024 MAGI. Tip: You might also be able to accelerate some business deductions into this year, which would reduce your MAGI and self-employment tax bill.