For Australians who’ve lived, worked, or invested in the United States, US tax rules can be a maze. IRS Publication 525 – titled “Taxable and Nontaxable Income” – is a crucial document for understanding what the IRS considers income and how it may affect your obligations both in the US and at home. With the ATO and IRS sharing more data than ever in 2025, it pays to know exactly what’s in this publication and why it matters for cross-border earners.

What is IRS Publication 525 and Why Should Australians Care?

Publication 525 is the IRS’s official guide to what counts as income for tax purposes. It covers salary, wages, fringe benefits, investments, pensions, and even unexpected windfalls. For Australians with US bank accounts, superannuation-style plans, rental properties, or remote work arrangements, understanding these definitions is vital.

Salary and Wages: All US employment income is generally taxable, even if you’re a non-resident. Double-taxation agreements may provide relief, but you must declare this income to the IRS.
Foreign Earned Income: Aussies living in the US may be eligible for the Foreign Earned Income Exclusion (FEIE), but the rules are strict and detailed in Pub 525.
Investment and Rental Income: Dividends, interest, and US rental income must be reported. The IRS’s 2025 crackdown on foreign-owned properties has heightened scrutiny here.

2025 Updates: What’s New in Pub 525?

This year’s edition features several changes reflecting US policy updates:

Cryptocurrency Reporting: The IRS now requires more detailed reporting on crypto gains, including a new form referenced in Pub 525. Australians trading on US-based platforms must pay close attention.
Remote Work and Digital Nomads: The IRS clarified income-sourcing rules for remote workers and digital nomads. If you’re an Aussie working for a US company from Byron Bay, the IRS may still consider your income taxable in the US, especially if you hold a green card or meet the substantial presence test.
Superannuation and Foreign Pensions: There’s ongoing debate about how US rules treat Australian super funds. Pub 525’s 2025 edition reiterates that most foreign pensions are taxable, but the Australia-US tax treaty may provide offsets. This area remains complex and under review.

Common Scenarios for Australians: Real-World Examples

Let’s look at how Pub 525 affects Aussies in practice:

Case 1: Remote US Employee in Australia
Jane is an Australian citizen who works for a San Francisco tech firm but lives in Melbourne. Her US salary is reportable to the IRS, and Pub 525 details how fringe benefits and bonuses are also taxable. However, the US-Australia tax treaty may reduce double taxation, provided Jane files the right forms in both countries.
Case 2: Aussie Investor with US Property
Mark owns a rental apartment in Seattle. Pub 525 covers how to report US rental income, depreciation, and allowable deductions. In 2025, the IRS has increased reporting scrutiny on non-resident owners, so Mark must keep meticulous records and file annually, even if he makes a loss.
Case 3: Dual Citizen with Super
Lisa holds US and Australian citizenship and contributes to an Australian super fund. Pub 525, in conjunction with IRS Notice 2025-14, signals that most super contributions and earnings are considered foreign pensions and thus taxable – but treaty relief may apply. This is a technical area where tax missteps are common.

Tips for Navigating IRS Publication 525 in 2025

Read the latest edition of Pub 525 online; the IRS updates it each year to reflect new laws and reporting requirements.
Cross-check what you report to the IRS with your ATO filings. The two agencies now routinely exchange information on foreign income streams.
If you have crypto, rental property, or a super fund linked to the US, keep detailed records and be proactive about compliance.
Pay attention to any IRS correspondence; failure to respond can trigger penalties, even from abroad.

Bottom Line

IRS Publication 525 is essential reading for any Australian earning, investing, or holding assets in the US. With the 2025 updates, the IRS is casting a wider net on international taxpayers, and Australians are firmly in focus. Understanding what’s considered income, what’s not, and how treaties apply can make a huge difference to your bottom line—and keep you out of trouble with two tax authorities.