Nonresident aliens generally do not pay higher tax rates than U.S. citizens, but they face different tax treatment that can result in higher effective taxes on certain income types. The key distinction involves what income is taxable: nonresident aliens pay federal income tax only on U.S.-source income, while citizens are taxed on worldwide income. This narrower tax base often means lower overall tax liability for nonresidents. However, nonresident aliens are subject to a flat 30% withholding tax on certain types of U.S.-source income—including dividends, interest, rents, and royalties—rather than the graduated tax rates (10-37%) that apply to citizens and residents. This flat withholding can effectively result in higher taxes on investment income. Additionally, nonresident aliens cannot claim many deductions and credits available to residents, such as the standard deduction or earned income tax credits, making them less able to reduce taxable income. They also pay self-employment tax if they have U.S. business income. The tax burden depends heavily on income type and source: nonresidents with primarily wages may pay less overall tax, while those with investment income may face higher effective rates due to the flat withholding. Tax treaties between the U.S. and the nonresident's home country often reduce or eliminate the 30% withholding rate, which can significantly lower their tax obligation.