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Deductions — Nonresident Aliens: U.S. Taxes for Noncitizens (2025 IRS Guide)

This guide covers “Deductions — Nonresident Aliens” within u.s. taxes for noncitizens. The following material presents the IRS treatment of this topic, including the qualifications, exceptions, and examples in the source section. Read the rules alongside the facts of your own situation before deciding what to report, deduct, or document.

Adapted from Publication 519 (2025), U.S. Tax Guide for Aliens, published by the Internal Revenue Service. This guide retains the source edition’s years, amounts, deadlines, and examples. It is guidance for that edition, not a statement that the same figures apply to every tax year.

Context for these rules

Resident and nonresident aliens can claim similar deductions on their U.S. tax returns. However, nonresident aliens can generally claim only deductions related to income that is effectively connected with their U.S. trade or business.

Deductions — Nonresident Aliens

You can claim deductions to figure your effectively connected taxable income (ECTI). You generally cannot claim deductions related to income that is not connected with your U.S. business activities. Except for certain itemized deductions, discussed later, you can claim deductions only to the extent they are connected with your effectively connected income.

Ordinary and necessary business expenses.

You can deduct all ordinary and necessary expenses in the operation of your U.S. trade or business to the extent they relate to income effectively connected with that trade or business. For information about other business expenses, go to Guide to business expense resources.

Qualified business income deduction.

If you have income effectively connected with a U.S. trade or business, you may be able to deduct up to 20% of your qualified business income from your qualified trade or business, plus 20% of your qualified REIT dividends and qualified publicly traded partnership (PTP) income. For more information, see Line 13a in the Instructions for Form 1040-NR.

For more information on the qualified business income deduction, see Form 8995, Form 8995-A and its schedules, and the related instructions for the forms and schedules.

Losses.

You can deduct losses resulting from transactions that you entered into for profit and that you were not reimbursed for by insurance, etc., to the extent that they relate to income that is effectively connected with a trade or business in the United States.

Note:

Beginning in 2021, and before 2026, you may not deduct excess business losses. For 2025, an excess business loss is the amount of losses from trades or businesses of a noncorporate taxpayer that is more than the threshold amount of $313,000 ($626,000 for married taxpayers filing a joint return).

Educator expenses.

If you were an eligible educator in 2025, you can deduct as an adjustment to income up to $300 in unreimbursed qualified expenses you paid or incurred during 2025 for certain professional development courses, and for books, supplies (other than nonathletic supplies for courses of instruction in health or physical education), computer equipment (including related software and services), and other supplementary equipment and materials you use in the classroom. For more information, see your tax form instructions.

Tip:

Qualified expenses include amounts paid or incurred in 2025 for personal protective equipment, disinfectant, and other supplies used for the prevention of the spread of coronavirus.

Individual retirement arrangement (IRA).

If you made contributions to a traditional IRA for 2025, you may be able to take an IRA deduction. But you must have taxable compensation effectively connected with a U.S. trade or business to do so. A Form 5498 should be sent to you by June 1, 2026, that shows all contributions to your traditional IRA for 2025. If you were covered by a retirement plan (qualified pension, profit-sharing (including 401(k)), annuity, SEP, SIMPLE, etc.) at work or through self-employment, your IRA deduction may be reduced or eliminated. But you can still make contributions to a traditional IRA even if you cannot deduct them. If you made nondeductible contributions to a traditional IRA for 2025, you must report them on Form 8606.

For more information, see Pub. 590-A.

Moving expenses.

The deduction for moving expenses is only available if you are a member of the U.S. Armed Forces on active duty and, due to a military order, you move because of a permanent change of station. For more information, see Pub. 3. If you qualify, use Form 3903 to figure the amount to deduct.

Services or reimbursements provided by government to members of the U.S. Armed Forces.

Do not include in income the value of moving and storage services provided by the government because of a move pursuant to a military order incident to a permanent change of station. Similarly, do not include in income amounts received as a dislocation allowance, temporary lodging expense, temporary lodging allowance, or move-in housing allowance. For more information, see Pub. 3.

Self-employed SEP, SIMPLE, and qualified retirement plans.

If you are self-employed, you may be able to deduct contributions to a SEP, SIMPLE, or qualified retirement plan that provides retirement benefits for yourself and your common-law employees, if any. To make deductible contributions for yourself, you must have net earnings from self-employment that are effectively connected with your U.S. trade or business.

See Pub. 560 for further information.

Penalty on early withdrawal of savings.

You must include in income all effectively connected interest income you receive or that is credited to your account during the year. Do not reduce it by any penalty you must pay on an early withdrawal from a time savings account. However, if the interest income is effectively connected with your U.S. trade or business during the year, you can deduct on line 18 of Schedule 1 (Form 1040) the amount of the early withdrawal penalty that the banking institution charged. Attach Schedule 1 (Form 1040) to your Form 1040-NR.

Student loan interest deduction.

If you paid interest in 2025 on a qualified student loan, you may be able to deduct up to $2,500 of the interest you paid. Generally, you can claim the deduction if all the requirements are met.

The deduction is taken on line 21 of Schedule 1 (Form 1040). Attach Schedule 1 (Form 1040) to your Form 1040-NR.

To figure the deduction, see the Instructions for Form 1040-NR. For more information, see Pub. 970.

Using the guidance

Keep the documents that establish the dates, amounts, and circumstances described above. References to other chapters, forms, worksheets, or earlier and later sections refer to the linked IRS publication. Check the full publication and its updates before relying on a rule for a different tax year or a situation not addressed here.

Sources and further reading

The cited U.S. government text is in the public domain. Source accessed October 28, 2026. Fynoptic has organized this material for educational use and is independent of, and not endorsed by, the IRS.

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