Tier 2 tax rates for railroads, no changes for 2021

Tier 2 tax rates for railroads, no changes for 2021

The U.S. Treasury Department and IRS today released for publication in the Federal Register a notice providing the tier 2 tax rates for 2021 (that is, with respect to compensation paid in 2021). Tier 2 taxes imposed on railroad employees, employers, and employee representatives are a source of funding for benefits under the Railroad Retirement Act.


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Today’s notice [PDF 210 KB] reveals there are no changes to the tier 2 tax rates for 2021 (they are unchanged from the rates for 2020, 2019, 2018, 2017, 2016, and 2015). Accordingly, the tier 2 tax rates for 2021 are as follows for:

  • Employees—4.9% of compensation
  • Employers—13.1% of compensation
  • Employee representatives—13.1% of compensation

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