The amounts of compensation subject to regular Railroad Retirement payroll taxes increased in January 2002, but the Railroad Retirement tax rates remain the same, according to the Railroad Retirement Board.

In 2002, the Railroad Retirement Tier I tax rate, like the Social Security tax rate, will remain at 7.65% for employers and employees. Tier I is the combination of the Social Security rate of 6.2% and 1.45% for Medicare Hospital Insurance. The maximum amount of an employee’s compensation subject to Tier I tax increased in 2002 to the Social Security maximum of $84,900 per year. There is no maximum on earnings subject to the 1.45% Medicare rate.

Under the new Railroad Retirement law passed last year, rail employers will pay a Tier II tax of 15.6% in 2002. The taxation rate of employees will continue at 4.9%. The maximum amount of compensation subject to the Tier II tax increased in 2002 to $63,000 per year.

As the new tax law also repealed the Railroad Retirement supplemental annuity tax, this year is no longer payable for years after 2001. The rate had been 26 cents per work-hour throughout 2001.

If you are using one of the computer accounting programs, such as WinStabs or Q&A Stabs, be certain to change the compensation maximums and the supplemental tax rates for 2002.

Also, if you are using one of the computer programs such as WinStabs or Q&A Stabs, it is not necessary to complete a paper payroll report. The computer-generated report may be filed with the UTU.

Any questions or requests for additional payroll forms, Form OE-1a, should be directed to UTU Director of Accounting William Toth at the International in Cleveland, Ohio.