Non-Resident Withholding Calculator
When US-source income (dividends, interest, rents, royalties, and certain other amounts) is paid to a non-resident alien (NRA), the payer is required to withhold US income tax at the applicable rate before remitting the payment. The statutory withholding rate under IRC Section 1441 is 30%, but tax treaties between the US and approximately 70 countries reduce this rate for specific income types. Enter the gross income amount and the applicable withholding rate (30% statutory, or the reduced treaty rate) to see the amount withheld and the net payment.
Non-resident withholding formula (IRC Section 1441)
Tax withheld = gross income x (withholding rate / 100)
Net payment = gross income - tax withheld
Treaty saving = gross income x (30% - applied rate) / 100
The withholding agent (the US payer) is responsible for collecting and remitting the withheld tax to the IRS using Form 1042 (annual) and Form 1042-S (per recipient). Failure to withhold makes the payer liable for the tax.
Common treaty withholding rates on dividends
- United Kingdom: 5% (qualifying companies) or 15% (others) per the US-UK treaty.
- Germany: 5% (10% shareholding) or 15% per the US-Germany treaty.
- Canada: 5% (10% shareholder) or 15% per USMCA/treaty.
- Japan: 5% (10% shareholder) or 10% per the US-Japan treaty.
- No treaty: 30% statutory rate applies.
Frequently asked questions
What is the default US withholding rate for non-resident aliens?
Under IRC Section 1441, the default (statutory) withholding rate on US-source fixed or determinable annual or periodical (FDAP) income paid to non-resident aliens (NRAs) is 30%. This includes dividends, interest, rents, royalties, and certain other income.
How do tax treaties reduce the withholding rate?
The US has income tax treaties with approximately 70 countries. Treaty provisions typically reduce the withholding rate on dividends to 5 to 15%, on interest to 0 to 15%, and on royalties to 0 to 10%. The reduced rate applies when the recipient provides Form W-8BEN.
What form does a non-resident alien file to claim a treaty rate?
A non-resident alien must provide Form W-8BEN (individuals) or W-8BEN-E (entities) to the withholding agent to claim a reduced treaty rate. Without the form, the 30% statutory rate applies.
Is interest on US bank deposits subject to withholding?
Portfolio interest (bank deposit interest and most bond interest paid to unrelated foreign persons) is generally exempt from the 30% withholding tax under IRC Section 871(h), but requires Form W-8BEN and cannot be paid to a 10% or greater shareholder.
What is FIRPTA and does it apply here?
FIRPTA (Foreign Investment in Real Property Tax Act) imposes a separate 15% withholding on the gross proceeds of a non-resident alien's sale of US real property interests. FIRPTA withholding is different from the FDAP withholding calculated here.
Official sources
- IRS, Withholding on Specific Income (NRAs): irs.gov/individuals/international-taxpayers/withholding-on-specific-income.
- IRS, US Tax Treaties A to Z: irs.gov/businesses/international-businesses/united-states-income-tax-treaties-a-to-z.
- IRS Form 1042-S, Foreign Person's US Source Income Subject to Withholding: irs.gov/forms-pubs/about-form-1042-s.
Reviewed by the CalculatorHub team, edited by James Graham, 15 June 2026. See our methodology.