How Tax Treaties Reduce Withholding
The US has tax treaties with roughly 70 countries. These treaties can reduce or eliminate federal income tax withholding on wages, scholarships, and other income for residents of the treaty country. The treaty applies based on the employee's country of tax residence — not citizenship or visa type.
Without a treaty, nonresident aliens are taxed at graduated rates on effectively connected income (wages) and 30% on fixed, determinable, annual, or periodical (FDAP) income (scholarships, interest, dividends).
Common Treaty Countries — Student Wage Provisions
This page covers one slice of the treaty rules: the exemptions for wages paid to students and trainees. Treaty rates for dividends, interest and royalties are a different set of rules, and they are published in the IRS tax treaty tables.
This table summarizes student/trainee wage exemptions only. Most treaties include a separate dependent-personal-services article (typically Article 14, 15, or 16) for non-student employees with different rules. For non-student rules, see the IRS tax treaty tables (Publication 901 now points readers there).
| Country | Student article | Annual wage cap | Time limit | Notes |
|---|---|---|---|---|
| China (PRC) | Article 20(c) | $5,000 | No fixed limit | Saving-clause exception generally allows the benefit to continue after the student becomes a US resident alien |
| India | Art 21(1) / 21(2) | No wage exemption | — | No student wage exemption (Art 21(1) covers only foreign-source maintenance), but Indian students may claim the US standard deduction under Art 21(2) — an unusually favorable rule |
| South Korea | Article 21(1) | $2,000 | 5 years | Student/trainee wage exemption is capped at $2,000/yr; do not confuse with Article 19 (non-student dependent services) |
| Germany | Article 20(4) | $9,000 | 4 years | Students and business apprentices |
| France | Article 21(1) | $5,000 | 5 years | Student wage exemption is $5,000/yr. A separate $8,000 provision applies to trainees under contract for up to 12 months — don't confuse the two. Teaching/research exemption is a separate article |
| Canada | Article XX | No wage exemption | — | Canadian treaty student article covers payments from abroad for maintenance/education only — not US-source wages. Canadian student employees are typically taxed at standard rates |
| UK | Article 20 | No wage exemption | — | UK–US treaty student article covers payments from abroad; no US-source wage exemption |
| Japan | Article 19 | No US-source wage exemption | — | Like Canada/UK — the current treaty's student article exempts only maintenance/education funds received from abroad, not US-source wages. A Japanese student's campus wages are taxed at standard NRA rates |
| Mexico | Article 21 | No wage exemption | — | Like Canada/UK — covers maintenance/education from abroad, not US-source wages |
| Netherlands | Article 22(1) | $2,000 | Reasonable period | $2,000 student wage cap is under Art 22(1); the separate Art 22(2) grant/scholarship provision carries its own 3-year limit. Don't merge the two |
Annual caps reset each calendar year. Wages above the cap are subject to standard NRA withholding for the rest of the year. Always verify against the current treaty text — see IRS Tax Treaty Tables for the authoritative source.
The India Exception
Indian students don't get a wage exemption under the treaty, but they do get one privilege most other NRAs don't: under Article 21(2), they can claim the regular US standard deduction on their Form 1040-NR. For tax year 2026 that's roughly $16,100 for a single filer — a meaningful tax reduction at filing time, even though it doesn't reduce withholding during the year.
Teaching and Research Exemptions
Some treaties have separate provisions for teachers, professors, and researchers distinct from the student article. A postdoctoral researcher from Germany might qualify under the research exemption rather than (or in addition to) the student article. These provisions often have different time limits and conditions. The NRA Tax Wizard evaluates both types when applicable.
Tax Treaty vs. Tax Residency
A critical point: once an employee becomes a US resident alien (through the green card test or substantial presence test), treaty provisions for students and temporary workers generally no longer apply. The employee must now file a W-4 and be taxed as a US person. Treaties still apply for other purposes (e.g., reduced dividend withholding for investments) but the employment-specific student article provisions do not.
Always Verify the Current Treaty
Treaties change, and some have been suspended. Always verify the current treaty text at IRS.gov Publication 515 or the IRS Tax Treaties page. The table above reflects general provisions as of early 2026 but should not substitute for checking the current treaty text for specific determinations.
Related reading
These exemptions are claimed on a form: see Form 8233 vs W-8BEN and the worked example how to fill out Form 8233 for Chinese F-1 students. Residency can end treaty eligibility, so read the substantial presence test explainer too.