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No. 24-11 For Immediate Release

December 2024

Railroad Retirement and Unemployment Insurance Taxes in 2025

The amounts of compensation subject to railroad retirement tier I and tier II payroll taxes will 

increase in 2025, while the tax rates on employers and employees will stay the same. In addition, 

unemployment insurance contribution rates paid by railroad employers will not include a surcharge, 

as continued improvements in the rail economy and reduced usage of unemployment and sickness 

benefits will result in an employer credit.

Tier I and Medicare Tax – The railroad retirement tier I payroll tax rate on covered rail 

employers and employees for 2025 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 will increase from $168,600 in 2024 to 

$176,100 in 2025, with no maximum on earnings subject to the 1.45 percent Medicare rate.

An additional Medicare payroll tax of 0.9 percent applies to an individual’s income exceeding 

$200,000, or $250,000 for a married couple filing a joint tax return. While employers will begin 

withholding the additional Medicare tax as soon as an individual’s wages exceed the $200,000 

threshold, the final amount owed or refunded will be calculated as part of the individual’s federal 

income tax return. 

Tier II Tax – The railroad retirement tier II tax rates in 2025 will remain at 4.9 percent for 

employees and 13.1 percent for employers. The maximum amount of earnings subject to railroad 

retirement tier II taxes in 2025 will increase from $125,100 to $130,800. 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.

U.S. Railroad Retirement Board

RRB News

844 North Rush Street Chicago, Illinois 60611-1275

RRB.gov

General Information: 877-772-5772

Public Affairs

Media Inquiries: opa@rrb.gov

312-751-4777
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Unemployment Insurance Contributions – Employers, but not employees, pay railroad 

unemployment insurance contributions, which are experience-rated by employer. The Railroad 

Unemployment Insurance Act also provides for a surcharge or credit based on the Railroad 

Unemployment Insurance Account balance measured against various threshold amounts. The accrual 

balance of the Railroad Unemployment Insurance Account was approximately $454.8 million on 

June 30, 2024, up from $363.1 million a year earlier on June 30, 2023. Based on this balance, 

existing employers other than those paying the minimum rate will receive a pooled credit of up to

0.83 percent applied to their contribution rate, the first time this has happened since 1994. No rates 

will be reduced below the minimum of 0.65 percent. Surcharges apply if the account balance is at or 

below $100 million, indexed to $166.6 million as of June 30, 2024. There was no surcharge in 2024, 

and a 1.5 percent surcharge in 2023.

Unemployment insurance contribution rates on railroad employers in 2025 will range from a 

minimum rate of 0.65 percent to a maximum of 12.0 percent on monthly compensation up to $2,065, 

an increase from $1,985 in 2024.

In 2025, the minimum rate of 0.65 percent will apply to 91 percent of covered employers, 

with 3 percent paying the maximum rate of 12.0 percent. New employers will pay an unemployment 

insurance contribution rate of 6.45, which represents the average rate paid by all employers in the 

period 2021-2023.

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