As noted earlier in this chapter, the three categories of investment income can be reduced by “properly allocable deductions” that were paid or incurred to produce the income and allowed as a deduction. These expenses include the deductions related to rental and royalty income, the early withdrawal of savings penalty, and ordinary and necessary trade or business deductions. In addition, certain itemized deductions, such as investment interest and taxes are allowed. However, investment expenses included as a Tier 2 miscellaneous itemized deduction are not allowed when computing NII for years 2018 through 2025.