RRB Release – Railroad Retirement and Unemployment Insurance Taxes in 2015

A recent release from the Railroad Retirement Board (RRB), states that the amounts of compensation subject to railroad retirement tier I and tier II payroll taxes will increase in 2015, with the tier I tax rates remaining the same while tier II tax rates will increase for both railroad employers and employees. Also, railroad unemployment insurance contribution rates paid by employers will include a surcharge of 1.5 percent in 2015.

Tier I and Medicare Tax.–The railroad retirement tier I payroll tax rate on covered rail employers and employees for the year 2015 remains at 7.65 percent. The railroad retirement tier I tax rate is the same as the social security tax, and for withholding and reporting purposes is divided into 6.20 percent for retirement and 1.45 percent for Medicare hospital insurance. The maximum amount of an employee’s earnings subject to the 6.20 percent rate increases from $117,000 to $118,500 in 2015, but there is no maximum on earnings subject to the 1.45 percent Medicare rate.

Tier II Tax.–The railroad retirement tier II tax rate on employees will be 4.9 percent in 2015, and the employers’ rate will be 13.1 percent. The rates in 2014 for employees and employers were 4.4 percent and 12.6 percent, respectively. The maximum amount of earnings subject to railroad retirement tier II taxes will increase from $87,000 to $88,200 in 2015. Since 2004, tier II tax rates are based on an average account benefits ratio reflecting railroad retirement fund levels. Depending on this ratio, the tier II tax rate for employees can be between 0 percent and 4.9 percent, while the tier II rate for employers can range between 8.2 percent and 22.1 percent.

Click here to read the full release from the RRB.