How does an ITIN reduce withholding tax?

An ITIN allows a non-resident to file Form W-8BEN with the US payer. On the form, the non-resident claims treaty benefits, which lowers the withholding rate to between 0 and 15 percent depending on the country and income type. Without an ITIN, the payer must apply the full 30 percent rate.

Does the 30 percent rate apply to all non-resident income?

No. The 30 percent rate applies only to passive (FDAP) income. Income effectively connected with a US trade or business is taxed at graduated rates on Form 1040-NR. Capital gains from US stock sales are generally not subject to US tax for non-residents who are not physically present 183 days or more during the year.

Can I get back withholding tax that was already taken?

Yes. If too much was withheld because Form W-8BEN was not filed in time, the non-resident can file Form 1040-NR within three years of the original due date and claim a refund of the excess. The ITIN must appear on every form filed.

How often do I need to renew Form W-8BEN?

Form W-8BEN is valid for the year signed plus three additional calendar years, unless circumstances change earlier (such as a change in country of residence or treaty status). Most brokers and US payers send renewal reminders before expiration.

Updated June 25, 2026

30% Withholding Tax: How Your ITIN Can Reduce It

Why Does the US Withhold 30% on Non-Resident Income?

Internal Revenue Code sections 1441 and 1442 require US payers to withhold tax at source on FDAP (fixed, determinable, annual, or periodical) income paid to non-resident aliens and foreign corporations. The 30 percent flat rate is the statutory default. Treaties negotiated with about 68 countries override this rate for residents of those countries who properly document their status.

Which Income Types Are Subject to 30% Withholding?

Dividends from US stocks, ETFs, and mutual funds.
Interest on US corporate bonds (most US Treasury and bank deposit interest is exempt for non-residents).
Royalties from US copyrights, patents, trademarks, and software licenses.
Rents from US real estate (unless net election made).
Gambling winnings (specific rules apply).
Pensions and annuities sourced to the US.

How Does an ITIN Cut the 30% Rate to a Treaty Rate?

Apply for an ITIN. File Form W-7 with the IRS, either with a tax return or under a treaty exception.
Complete Form W-8BEN. Enter your ITIN, country of residence, and the specific treaty article that reduces the rate.
Submit Form W-8BEN to the US payer (broker, employer, publisher) before they make the next payment.
The payer applies the reduced rate on all subsequent payments, not retroactively.
File Form 1040-NR annually to reconcile any over- or under-withholding.

For the underlying mechanics see the ITIN withholding tax guide.

What Treaty Rates Are Available With a Valid ITIN?

Country	Dividend Rate	Interest Rate
No treaty (default)	30%	30%
Canada	15%	0%
United Kingdom	15%	0%
India	15-25%	10-15%
Germany	15%	0%

For the full country list see the ITIN tax treaty page.

How Do You Recover Overwithheld Tax After the Fact?

If your broker or US payer withheld 30 percent because you did not file Form W-8BEN in time, file Form 1040-NR for that calendar year. Attach Form 1042-S (the statement your payer issued) and claim the treaty benefit directly on the return. The IRS refunds the difference. You have three years from the original return due date to file for the refund.

What Happens If You Use the Wrong ITIN or Let It Expire?

An expired ITIN voids the Form W-8BEN. The US payer reverts to 30 percent withholding until a renewed ITIN is supplied. For renewal steps see the ITIN renewal guide.

Frequently Asked Questions

The 30 percent withholding tax is the default US federal tax that payers must withhold on payments of fixed, determinable, annual, or periodical (FDAP) income to non-resident aliens. This includes dividends, interest, royalties, and rental income from US sources. The rate is set by Internal Revenue Code sections 1441 and 1442.

Ready to apply? Get your ITIN with a Certifying Acceptance Agent — $297 flat, ready in 7 days.