Tier 2 tax rates for railroads, no changes for 2025

Imposed on railroad employees, employers, and employee representatives 

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November 25, 2024

The U.S. Treasury Department and IRS published a notice in the Federal Register providing the tier 2 tax rates for 2025 (that is, with respect to compensation paid in 2025).

Tier 2 taxes imposed on railroad employees, employers, and employee representatives are a source of funding for benefits under the Railroad Retirement Act.

There are no changes to the tier 2 tax rates for 2025 (that is, the rates are unchanged from the rates applicable for 2024). The tier 2 tax rates for 2025 are for:

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

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