The amounts of compensation subject to Railroad Retirement Tier I and Tier II payroll taxes will increase in 2026, while the tax rates on employers and employees will remain unchanged. In addition, unemployment insurance contribution rates paid by railroad employers will not include a surcharge, as continued improvement in the rail economy has kept the Railroad Unemployment Insurance Account at a healthy balance, according to the Railroad Retirement Board (RRB).
Tier I and Medicare Tax
The Railroad Retirement Tier I payroll tax rate on covered rail employers and employees for 2026 remains 7.65%, identical to the Social Security tax rate. For withholding and reporting purposes, Tier I is divided into:
- 6.20% for retirement
- 1.45% for Medicare hospital insurance
The maximum amount of an employee’s earnings subject to the 6.20% Tier I retirement portion will increase from $176,100 in 2025 to $184,500 in 2026. As in previous years, there is no maximum on earnings subject to the 1.45% Medicare portion.
An additional 0.9% Medicare payroll tax applies to individuals earning more than $200,000, or $250,000 for married couples filing jointly. Employers begin withholding the additional Medicare tax when an employee’s wages exceed $200,000. The final amount owed or refunded is calculated with the individual’s federal income tax return.
Tier II Tax
Railroad Retirement Tier II tax rates will remain unchanged for 2026 at:
- 4.9% for employees
- 13.1% for employers
The maximum amount of earnings subject to Tier II taxes will increase from $130,800 in 2025 to $137,100 in 2026.
Tier II tax rates are based on an average account benefits ratio reflecting the balance of the Railroad Retirement system. By law, employee Tier II rates may range from 0% to 4.9%, while employer rates may vary between 8.2% and 22.1%, depending on funding levels.
Unemployment Insurance Contributions
The employers (not employees) pay railroad unemployment insurance contributions, which are experience-rated by the employer. Under the Railroad Unemployment Insurance Act (RUIA), a surcharge is applied when the Railroad Unemployment Insurance Account balance falls to or below certain indexed thresholds.
The account balance was approximately $405.3 million as of June 30, 2025, down from $454.8 million the prior year. Surcharges are triggered when the balance is at or below $100 million, indexed to $173.0 million as of June 30, 2025. Because the account remains well above that threshold, no surcharge will apply in 2026, continuing the surcharge-free years of 2024 and 2025.
Unemployment insurance contribution rates for railroad employers in 2026 will range from:
- 0.65% (minimum)
- 12.0% (maximum)
applied to monthly compensation up to $2,150, an increase from $2,065 in 2025.
In 2026:
- 91% of covered employers will pay the minimum 0.65% rate
- 3% will pay the maximum 12.0% rate
New employers will pay 5.58%, reflecting the average contribution rate paid during 2022–2024.
Railroad Retirement & Unemployment Insurance Tax Table — 2026
| Tax Type | Rate-Employee | Rate- Employer | Annual Taxable Maximum | Annual Tax Amount Employer |
| Tier 1 – Medicare | 1.45% | 1.45% | No Maximum | No Maximum |
| Tier 1 – Railroad Retirement | 6.20% | 6.20% | $184,500.00 | $11,439.00 |
| Tier 2 – Railroad Retirement | 4.90% | 13.10% | $137,100.00 | $17,948.10 |
| Total | 12.55% | 20.75% | — | $29,387.10 |
* Additional Medicare Tax: Employees pay an extra 0.9% Medicare tax on earnings above $200,000 (individual) or $250,000 (joint filers). This additional tax is not reflected in the percentage rates above.
Note: Tier I Medicare and Tier I Railroad Retirement tax rates are equivalent to the 2026 Social Security tax rates. Tier II Railroad Retirement tax rates do not apply to employees covered under Social Security
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