Railroad Retirement Tier I and II Earnings Limits Increase

February 28, 2008 | 08:50 a.m. CST

The amounts of compensation subject to Railroad Retirement Tier I and Tier II payroll taxes will increase in 2008; however, the Tier I and Tier II tax rates on employees and employers remains unchanged.

Tier I and Medicare tax rates will remain the same in 2008 at 6.2 percent and 1.45 percent, respectively; however, the maximum amount of an employee's earnings subject to the 6.20 percent Tier I rate will increase to $102,000 in 2008 from $97,500 in 2007. All compensation earned is subject to the 1.45 percent Medicare tax, there is no earnings limit.

Railroad Retirement Tier II tax rate on employees will remain at 3.9 percent in 2008, and the rate on employers will remain at 12.1 percent; however, the maximum amount of earnings subject to Railroad Retirement Tier II taxes will increase to $75,900 in 2008 from $72,600 in 2007.

Also as a reminder, employees who make charitable contributions through payroll deductions should be aware of new IRS rules regarding record keeping that went into effect beginning with 2007 income tax returns. For more information, see IRS Requires Documentation for Payroll Charitable Deductions.

If you have questions about railroad retirement, or railroad unemployment and sickness benefits, please visit the Railroad Retirement Board (RRB), or call your local RRB office. See Year 2008 Railroad Retirement and Unemployment Insurance Taxes for more information on Tier I and II taxes.