
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document affected by Public Law 107-90 Section 204(c)]
[Document affected by Public Law 107-90 Section 204(e)(5)]
[CITE: 26USC3201]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                      Subtitle C--Employment Taxes
 
                 CHAPTER 22--RAILROAD RETIREMENT TAX ACT
 
                     Subchapter A--Tax on Employees
 
Sec. 3201. Rate of tax


(a) Tier 1 tax

    In addition to other taxes, there is hereby imposed on the income of 
each employee a tax equal to the applicable percentage of the 
compensation received during any calendar year by such employee for 
services rendered by such employee. For purposes of the preceding 
sentence, the term ``applicable percentage'' means the percentage equal 
to the sum of the rates of tax in effect under subsections (a) and (b) 
of section 3101 for the calendar year.

(b) Tier 2 tax

    In addition to other taxes, there is hereby imposed on the income of 
each employee a tax equal to 4.90 percent of the compensation received 
during any calendar year by such employee for services rendered by such 
employee.

(c) Cross reference

            For application of different contribution bases with respect 
        to the taxes imposed by subsections (a) and (b), see section 
        3231(e)(2).

(Aug. 16, 1954, ch. 736, 68A Stat. 431; Aug. 31, 1954, ch. 1164, pt. II, 
Sec. 206(a), 68 Stat. 1040; Pub. L. 86-28, pt. II, Sec. 201(a), May 19, 
1959, 73 Stat. 28; Pub. L. 88-133, title II, Sec. 201, Oct. 5, 1963, 77 
Stat. 221; Pub. L. 89-97, title I, Secs. 105(b)(1), 111(c)(1), July 30, 
1965, 79 Stat. 335, 342; Pub. L. 89-212, Secs. 4, 5(a), Sept. 29, 1965, 
79 Stat. 861; Pub. L. 89-699, title III, Sec. 301(a), Oct. 30, 1966, 80 
Stat. 1078; Pub. L. 89-700, title III, Sec. 301(v), (vi), Oct. 30, 1966, 
80 Stat. 1088, 1089; Pub. L. 93-69, title I, Sec. 102(a), July 10, 1973, 
87 Stat. 162; Pub. L. 94-93, title II, Sec. 201, Aug. 9, 1975, 89 Stat. 
466; Pub. L. 94-455, title XIX, Sec. 1903(a)(6), Oct. 4, 1976, 90 Stat. 
1807; Pub. L. 97-34, title VII, Sec. 741(a), Aug. 13, 1981, 95 Stat. 
347; Pub. L. 98-76, title II, Secs. 211(a), 221, Aug. 12, 1983, 97 Stat. 
419, 420; Pub. L. 100-203, title IX, Sec. 9031(a), Dec. 22, 1987, 101 
Stat. 1330-296; Pub. L. 101-508, title V, Sec. 5125(a), Nov. 5, 1990, 
104 Stat. 1388-285.)


                               Amendments

    1990--Subsec. (a). Pub. L. 101-508 substituted ``applicable'' for 
``following'' before ``percentage of the'' and provision defining the 
term ``applicable percentage'' for provision specifying that in the case 
of compensation received during 1985 the rate of tax was 7.05 percent, 
for 1986 or 1987 the rate was 7.15 percent, for 1988 or 1989 the rate 
was 7.51 percent, and 1990 or thereafter the rate was 7.65 percent.
    1987--Subsec. (b). Pub. L. 100-203 amended subsec. (b) generally. 
Prior to amendment, subsec. (b) read as follows: ``In addition to other 
taxes, there is hereby imposed on the income of each employee a tax 
equal to the following percentage of the compensation received during 
any calendar year by such employee for services rendered by such 
employee:

  ``In the case of compensation
    received during:                                  The rate shall be:
            1985................................                  3.50  
            1986 or thereafter..................                 4.25.''

    1983--Pub. L. 98-76, Sec. 221, amended section generally, 
substituting a two tiered tax system with accompanying tax rate tables 
and a cross reference to section 3231 of this title, for provisions 
which had taxed an employee at 2.75 percent of so much of the 
compensation paid in any calendar month to such employee for services 
rendered by him as was not in excess of an amount equal to one-twelfth 
of the current maximum annual taxable ``wages'' as defined in section 
3121 for any month and which had provided that the rate of tax imposed 
by subsection (a) be increased by the rate of the tax imposed with 
respect to wages by section 3101(a) plus the rate imposed by section 
3101(b) of so much of the compensation paid in any calendar month to 
such employee for services rendered by him as was not in excess of an 
amount equal to one-twelfth of the current maximum annual taxable 
``wages'' as defined in section 3121 for any month.
    Pub. L. 98-76, Sec. 211(a), substituted ``2.75 percent'' for ``2.0 
percent''.
    1981--Subsec. (a). Pub. L. 97-34 added subsec. (a).
    Subsec. (b). Pub. L. 97-34 designated existing provisions as subsec. 
(b) and substituted ``The rate of tax imposed by subsection (a) shall be 
increased by'' for ``In addition to other taxes, there is hereby imposed 
on the income of every employee a tax rate equal to''.
    1976--Pub. L. 94-455 struck out ``of the Internal Revenue Code of 
1954'' after ``wages by section 3101(a)'', ``of such Code'' after ``rate 
imposed by section 3101(b)'', ``after September 30, 1973,'' after ``for 
services rendered by him'', ``of the Internal Revenue Code of 1954'' 
after ``as defined in section 3121'', and ``after September 30, 1973'' 
after ``for any month''.
    1975--Pub. L. 94-93 inserted ``in any calendar month'' after 
``compensation paid''.
    1973--Pub. L. 93-69 substituted new tax rate provisions on income of 
employee for services rendered after Sept. 30, 1973, for former 
provisions which prescribed 6\1/4\, 6\1/2\, 7, 7\1/4\, and 7\1/2\ 
percent on income for services rendered after Sept. 30, 1965, Dec. 31, 
1965, Dec. 31, 1966, Dec. 31, 1967, and Dec. 31, 1968, respectively, as 
is not in excess of (i) $450, or (ii) an amount equal to one-twelfth of 
the current maximum annual taxable ``wages'' as defined in section 3121 
of the Internal Revenue Code of 1954, whichever is greater, for any 
month after September 30, 1965: Provided, That the rate of tax imposed 
by this section shall be increased, with respect to compensation paid 
for services rendered after September 30, 1965, by a number of 
percentage points (including fractional points) equal at any given time 
to the number of percentage points (including fractional points) by 
which the rate of the tax imposed with respect to wages by section 
3101(a) plus the rate imposed by section 3101(b) at such time exceeds 
2\3/4\ percent (the rate provided by paragraph (2) of section 3101 as 
amended by the Social Security Amendments of 1956).
    1966--Pub. L. 89-700 substituted ``rendered after September 30, 
1965'' for ``rendered after December 31, 1964'', and ``(i) $450, or (ii) 
an amount equal to one-twelfth of the current maximum annual taxable 
`wages' as defined in section 3121 of the Internal Revenue Code of 1954, 
whichever is greater, for any month after September 30, 1965'' for 
``$400 for any calendar month before the calendar month next following 
the month in which this provision was amended in 1963, or $450 for any 
calendar month after the month in which this provision was so amended 
and before the calendar month next following the calendar month in which 
this provision was amended in 1965, or (i) $450, or (ii) an amount equal 
to one-twelfth of the current maximum annual taxable `wages' as defined 
in section 3121 of the Internal Revenue Code of 1954, whichever is 
greater, for any month after the month in which this provision was so 
amended''.
    Pub. L. 89-699 substituted ``7 percent'' for ``6\3/4\ percent'' in 
subd. (3), ``7\1/4\ percent'' for ``7 percent'' in subd. (4), and ``7\1/
2\ percent'' for ``7\1/4\ percent'' in subd. (5).
    1965--Pub. L. 89-212 substituted pars. (1) to (5) for former pars. 
(1) and (2) which imposed a tax equal to 6\3/4\ percent of so much of 
the compensation paid to such employee for services rendered by him 
after the month in which this provision was amended in 1959, and before 
Jan. 1, 1962, and 7\1/4\ percent of so much of the compensation paid to 
such employee for services rendered by him after Dec. 31, 1961, and 
inserted ``and before the calendar month next following the calendar 
month in which this provision was amended in 1965, or (i) $450, or (ii) 
an amount equal to one-twelfth of the current maximum annual taxable 
`wages' as defined in section 3121 of the Internal Revenue Code of 1954, 
whichever is greater, for any month after the month in which this 
provision was so amended''.
    Pub. L. 89-97 substituted ``the rate of the tax imposed with respect 
to wages by section 3101(a) at such time exceeds 2\3/4\ percent (the 
rate provided by paragraph (2) of section 3101 as amended by the Social 
Security Amendments of 1956)'' for ``the rate of the tax imposed with 
respect to wages by section 3101 at such time exceeds the rate provided 
by paragraph (2) of such section 3101 as amended by the Social Security 
Amendments of 1956'' and inserted ``plus the rate imposed by section 
3101(b)'' after ``section 3101(a)'', respectively.
    1963--Pub. L. 88-133 limited existing taxable compensation base of 
$400 to any calendar month before Nov. 1963 and increased such base to 
$450 for any calendar month after Oct. 1963.
    1959--Pub. L. 86-28 increased tax from 6\1/4\ percent of 
compensation not in excess of $350 for any calendar month to 6\3/4\ 
percent of the compensation not in excess of $400 for any calendar month 
for services rendered before Jan. 1, 1962, and to 7\1/4\ percent for 
services rendered after Dec. 31, 1961, and required an increase in the 
rate of tax with respect to compensation paid for services rendered 
after Dec. 31, 1964, by a number of percentage points equal at any given 
time to the number of percentage points by which the rate of tax imposed 
by section 3101 of this title at such time exceeds the rate provided by 
par. (2) of such section 3101 as amended by the Social Security 
Amendments of 1956.
    1954--Act Aug. 31, 1954, substituted ``$350'' for ``$300''.


                    Effective Date of 1987 Amendment

    Section 9031(b) of Pub. L. 100-203 provided that: ``The amendment 
made by this section [amending this section] shall apply with respect to 
compensation received after December 31, 1987.''


            Effective and Termination Dates of 1983 Amendment

    Section 212 of Pub. L. 98-76 provided that: ``The amendments made by 
this part [part I (Secs. 211, 212) of subtitle A of title II of Pub. L. 
98-76, amending this section, sections 3211 and 3221 of this title, and 
section 430 of Title 42, The Public Health and Welfare] shall apply to 
compensation paid for services rendered after December 31, 1983, and 
before January 1, 1985.''
    Section 227(a) of Pub. L. 98-76 provided that: ``The amendments made 
by sections 221, 222, 223, and 225 [amending this section and sections 
3202, 3211, 3221, and 3231 of this title and section 430 of Title 42] 
shall apply to remuneration paid after December 31, 1984.''


                    Effective Date of 1981 Amendment

    Section 741(e) of Pub. L. 97-34 provided that: ``The amendments made 
by this section [amending this section and sections 3211, 3221, and 3231 
of this title and section 430 of Title 42, The Public Health and 
Welfare] shall apply to compensation paid for services rendered after 
September 30, 1981.''


                    Effective Date of 1976 Amendment

    Amendment by Pub. L. 94-455 applicable with respect to compensation 
paid for services rendered after Dec. 31, 1976, see section 1903(d) of 
Pub. L. 94-455, set out as a note under section 3101 of this title.


                    Effective Date of 1975 Amendment

    Section 207 of Pub. L. 94-93 provided that: ``The amendments made by 
sections 201 through 205 of this title [amending this section and 
sections 3211, 3221, and 3231 of this title] shall apply for taxable 
years ending on or after the date of the enactment of this Act [Aug. 9, 
1975] and for taxable years ending before the date of the enactment of 
this Act as to which the period for assessment and collection of tax or 
the filing of a claim for credit or refund has not expired on the date 
of enactment of this Act. The amendment made by section 206 of this 
title [amending section 3231 of this title] shall apply for taxable 
years beginning on or after the date of enactment of this Act: Provided, 
however, That with respect to payment made prior to the date of 
enactment of this Act, the employee may file a written request under 
section 206 within six months after the enactment of this Act.''


                    Effective Date of 1973 Amendment

    Section 109(b) of Pub. L. 93-69 provided that: ``The amendments made 
by section 102 of this Act [amending this section and sections 3202, 
3211, and 3221 of this title] shall become effective on October 1, 1973, 
and shall apply only with respect to compensation paid for services 
rendered on or after that date: Provided, however, That such amendments 
shall not be applicable to any dock company, common carrier railroad, or 
railway labor organization described in section 1(a) of the Railroad 
Retirement Act of 1937 [section 228a(a) of Title 45, Railroads], with 
respect to those of its employees covered as of October 1, 1973, by a 
private supplemental pension plan established through collective 
bargaining, where a moratorium in an agreement made on or before March 
8, 1973, is applicable to changes in rates of pay contained in the 
current collective-bargaining agreement covering such employees, until 
the earlier of (1) the date as of which such moratorium expires, or (2) 
the date as of which such dock company, common carrier railroad, or 
railway labor organization agrees through collective bargaining to make 
the provisions of such amendments applicable.''


                    Effective Date of 1965 Amendments

    Section 6 of Pub. L. 89-212 provided that: ``The amendments made by 
sections 1 and 3 of this Act [amending sections 228b, 228c, and 228e of 
Title 45, Railroads] shall take effect with respect to annuities 
accruing and deaths occurring in months after the month in which this 
Act is enacted [September 1965], and shall apply also to annuities paid 
in lump sums equal to their commuted value because of a reduction in 
such annuities under section 2(e) of the Railroad Retirement Act of 1937 
[section 228b(e) of Title 45], as in effect before the amendments made 
by this Act, as if such annuities had not been paid in such lump sums: 
Provided, however, That the amounts of such annuities which were paid in 
lump sums equal to their commuted value shall not be included in the 
amount of annuities which become payable by reason of section 1 of this 
Act [amending section 228b of Title 45]. The amendments made by section 
2 of this Act [amending sections 3203, 3231, 3402, 6053, and 6652 of 
this title, and section 228a of Title 45] shall apply only with respect 
to tips received after 1965. The amendments made by section 4 of this 
Act [amending this section and sections 3202, 3211, and 3221 of this 
title] shall apply only with respect to calendar months after the month 
in which this Act is enacted. The amendments made by section 5 of this 
Act [amending this section and sections 3211 and 3221 of this title] 
shall apply only with respect to compensation paid for services rendered 
after September 30, 1965.''
    Section 105(b)(4) of Pub. L. 89-97 provided that: ``The amendments 
made by this subsection [amending this section and sections 3211 and 
3221 of this title] shall be effective with respect to compensation paid 
for services rendered after December 31, 1965.''
    Amendment by section 111(c)(1) of Pub. L. 89-97 applicable to 
calendar year 1966, or to any subsequent calendar year but only if by 
October 1 immediately preceding such calendar year the Railroad 
Retirement Tax Act [this chapter] provides for a maximum amount of 
monthly compensation taxable under such Act during all months of such 
calendar year equal to one-twelfth of maximum wages which Federal 
Insurance Contributions Act [section 3101 et seq. of this title] 
provides may be counted for such calendar year, see section 111(e) of 
Pub. L. 89-97, set out as an Effective Date note under section 1395i-1 
of Title 42, The Public Health and Welfare.


                    Effective Date of 1959 Amendment

    Section 202 of Pub. L. 86-28 provided that: ``The amendments made by 
section 201 [amending this section and sections 3202, 3211, and 3221 of 
this title] shall, except as otherwise provided in such amendments, be 
effective as of the first day of the calendar month next following the 
month in which this Act was enacted [May, 1959], and shall apply only 
with respect to compensation paid after the month of such enactment, for 
services rendered after such month of enactment.''


                    Effective Date of 1954 Amendment

    Section 407 of act Aug. 31, 1954, as amended by act Oct. 22, 1986, 
Pub. L. 99-514, Sec. 2, 100 Stat. 2095, provided that: ``The amendments 
to the Internal Revenue Code of 1986 [formerly I.R.C. 1954] made by 
section 206 [amending this section and sections 3202, 3211, 3221, and 
3231 of this title] shall become effective as if enacted as a part of 
the Internal Revenue Code of 1986.''


                              Separability

    Section 301 of Pub. L. 93-69 provided that: ``If any provision of 
this Act [amending this section, sections 3202, 3211, and 3221 of this 
title, sections 228b, 228c, and 228e of Title 45, Railroads, and section 
15a of former Title 49, and enacting provisions set out as notes under 
this section, and sections 228b, 228c, 228f, and 228o of Title 45] or 
the application thereof to any person or circumstances should be held 
invalid, the remainder of such Act or the application of such provision 
to other persons or circumstances shall not be affected thereby.''


 Penalties and Interest Not Assessed for Failure To Make Timely Payment 
 During Period January 1, 1982, to June 30, 1982, of Taxes Attributable 
                     to Amendments by Pub. L. 97-123

    For provision that no penalties or interest shall be assessed on 
account of any failure to make timely payment of taxes imposed by 
subsec. (b) of this section with respect to payments made for the period 
Jan. 1, 1982, and ending June 30, 1982, to the extent that such taxes 
are attributable to section 3 of Pub. L. 97-123 or the amendments made 
by that section, see section 3(f) of Pub. L. 97-123, set out as a note 
under section 3101 of this title.

                  Section Referred to in Other Sections

    This section is referred to in sections 24, 72, 275, 1402, 3202, 
3231, 3502, 6051, 6053, 6205, 6413, 6652 of this title; title 45 
sections 231, 231e, 231f-1, 231n-1.
