Internal Revenue Code:Sec. 3201. Rate of tax
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Location in Internal Revenue Code
TITLE 26 - INTERNAL REVENUE CODE
Subtitle C - Employment Taxes
CHAPTER 22 - RAILROAD RETIREMENT TAX ACT
Subchapter A - Tax on Employees
Statute
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
(1) In general
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.
(2) Applicable percentage
For purposes of paragraph (1), the term ''applicable
percentage'' means -
(A) 4.90 percent in the case of compensation received during
2002 or 2003, and
(B) in the case of compensation received during any calendar
year after 2003, the percentage determined under section 3241
for such calendar year.
(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).
Sources
(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, Sec.
105(b)(1), 111(c)(1), July 30, 1965, 79 Stat. 335, 342; Pub. L.
89-212, Sec. 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, Sec. 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; Pub. L. 107-90, title
II, Sec. 204(c), Dec. 21, 2001, 115 Stat. 892.)
Miscellaneous
AMENDMENTS
2001 - Subsec. (b). Pub. L. 107-90 amended heading and text of
subsec. (b) generally. Prior to amendment, text read as follows:
''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.''
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 2001 AMENDMENT
Amendment by Pub. L. 107-90 applicable to calendar years
beginning after Dec. 31, 2001, see section 204(f) of Pub. L.
107-90, set out as an Effective and Termination Dates of 2001
Amendments note under section 24 of this title.
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 (Sec. 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.
References
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 24, 72, 275, 1402, 3202,
3231, 3241, 3502, 6051, 6053, 6205, 6413, 6652 of this title; title
45 sections 231, 231e, 231f-1, 231n-1.
