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Railroad employers don’t follow standard federal payroll tax rules. The Railroad Retirement Tax Act (RRTA) replaces standard FICA taxes entirely for rail workers, with two tiers of separate rates that adjust annually. Most railroads also pay Railroad Unemployment Insurance Account (RUIA) taxes. Here’s what you need to know about the 2026 rates and how they apply to payroll.
2026 RRTA Rates and Wage Bases
Tier I works like Social Security: 6.2% for both employee and employer on wages up to the annual wage base. For 2026, the RRTA Tier I wage base is expected to be approximately $175,000, though it’s subject to final IRS adjustment. Tier II is a supplemental railroad pension. Rates vary by railroad and typically range from 0.9% to 5.85% for employees and 3.5% to 11.15% for employers. Put them together, and the combined RRTA rate can exceed 15% for both sides. That’s significantly higher than standard FICA.
2026 RUIA Rates
RUIA rates for 2026 are expected to stay in the 0.65% to 2.75% range for employees and 4% to 11.1% for employers, depending on the railroad and its claims history. Unlike standard FUTA, RUIA funds unemployment benefits specifically for railroad workers through a completely separate system.
Reporting and Compliance
Railroad employers file with the Railroad Retirement Board (RRB), not the IRS. Form RRB-6401 is filed quarterly, and Form RRB-900 is filed annually. W-2s must show RRTA wages in the appropriate boxes. Miss a filing or get the withholding wrong, and the RRB will assess penalties and interest. It’s a separate system with its own rules and its own enforcement.
Bottom Line
Standard payroll procedures don’t apply here. RRTA and RUIA require specialized knowledge, separate reporting systems, and accurate wage base tracking. Most railroad employers work with consultants or software providers that specialize in rail payroll. The compliance stakes are too high to guess.
Frequently Asked Questions
The information provided is for educational purposes only and should not be construed as legal or tax advice. Consult a tax professional or attorney regarding your specific situation.
RRTA & RUIA Compliance
Let Netchex handle RRTA and RUIA tax calculations and reporting for your railroad workforce.
The information provided is for educational purposes only and should not be construed as legal or tax advice. Consult a tax professional or attorney regarding your specific situation.
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