Railroad Workers Get Their Own Special Tax System Apparently
Published Date: 11/25/2025
Notice
Summary
Starting in 2026, railroad workers, their employers, and employee reps will see new Tier 2 tax rates that help fund retirement benefits. Employees will pay 4.9% of their pay, while employers and reps will each pay 13.1%. These rates kick in for all 2026 earnings, so everyone involved should get ready for the change!
Analyzed Economic Effects
3 provisions identified: 0 benefits, 3 costs, 0 mixed.
Railroad Employer Tier 2 Tax Increase
Railroad employers must pay a Tier 2 tax of 13.1% on compensation paid in calendar year 2026. This 13.1% employer tax applies to all 2026 payroll for railroad employers to help fund Railroad Retirement Act benefits.
Railroad Employee Tier 2 Tax Rise
If you are a railroad employee, you will pay a Tier 2 tax of 4.9% on compensation paid in calendar year 2026. This new rate applies to all 2026 earnings for railroad employees and helps fund Railroad Retirement Act benefits.
Employee Representative Tier 2 Tax Match
Employee representatives (e.g., union representatives) must pay a Tier 2 tax of 13.1% on compensation paid in calendar year 2026. The 13.1% rate for employee representatives applies to all 2026 compensation and helps fund Railroad Retirement Act benefits.
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