Are railroad retirement benefits taxable?

Two categories, two sets of rules

Publication 575 says benefits paid under the Railroad Retirement Act fall into two categories that are treated differently for income tax purposes. The first is the part of tier 1 that equals the Social Security benefit the employee or beneficiary would have been entitled to under the Social Security system, called the social security equivalent benefit (SSEB). You treat it for tax purposes as Social Security benefits. The second category is everything else: the rest of tier 1 (the non-social security equivalent benefit, NSSEB), plus any tier 2 benefit, vested dual benefit (VDB) and supplemental annuity benefit.

The SSEB part

If you received, repaid or had tax withheld from the SSEB part during the year, the Railroad Retirement Board sends Form RRB-1099 (Form RRB-1042S for nonresident aliens). How much of it is taxable is figured with the Social Security worksheets, and Publication 575 sends you to Publication 915 for that, along with Notice 703 and the Form 1040 instructions. To start or change withholding from the SSEB part, a U.S. citizen files Form W-4V with the RRB.

The NSSEB, tier 2, VDB and supplemental part

This second category is shown on Form RRB-1099-R and is treated as an amount received from a qualified employee plan. That allows tax-free recovery of employee contributions from the tier 2 benefits and the NSSEB part of tier 1. VDBs and supplemental annuity benefits are non-contributory pensions and are fully taxable. The NSSEB and tier 2 benefits, less certain repayments, are combined into the Contributory Amount Paid in box 4.

To change withholding on this category, use Form RRB W-4P, not the SSA or IRS forms. Amounts shown on Form RRB-1099-R are treated as a normal distribution and distribution code 7 is used if one is asked for.

Reading Form RRB-1099-R

Box 3 is the employee contribution amount, the amount of tax withheld from the employee’s earnings that exceeded what would have been withheld under Social Security. It is your cost for figuring the tax-free part of the NSSEB and tier 2 benefit. If box 3 is blank, box 4 is fully taxable. Box 4 is the gross NSSEB and tier 2 benefit less repayments in the year. Box 5 is the vested dual benefit and box 6 is the supplemental annuity, both fully taxable. Box 7 is the total gross paid, the sum of boxes 4, 5 and 6, and is the amount to include on Form 1040 line 5a. Box 8 shows repayments of earlier-year benefits and box 9 shows federal tax withheld.

The amounts are before deductions for withholding, Medicare premiums and garnishments, and after offsets for Social Security benefits, age reduction and certain public service pensions.

Figuring the tax-free part

When you have a cost in box 3, the publication directs you to Partly Taxable Payments, which uses the Simplified Method for qualified plans. Our simplified method page walks through the worksheet. Example: if box 3 shows $24,000 and you were 62 on an annuity starting date after November 18, 1996, Table 1 gives 260 expected payments, a tax-free amount of about $92.31 a month. Your taxable amount is box 4 minus the tax-free part for the months paid, plus boxes 5 and 6 in full.

Repayments and nonresident aliens

If you had to repay railroad retirement benefits that you included in income in an earlier year, you can deduct the amount in the year you repay. If you repay $3,000 or less, miscellaneous itemized deductions are suspended after 2017 and not deductible; more than $3,000 can be a Schedule A deduction or a credit. Nonresident aliens are subject to 30% tax on the SSEB part of tier 1 unless exempt or a treaty provides a lower rate, and receive separate Form RRB-1099-R for each rate or country change.

Limits

This page shows how the publication classifies each benefit. It does not compute your taxable Social Security (see Publication 915) and does not cover state tax, which is not covered by the publication. Confirm details with the RRB at rrb.gov and a tax professional.

Sources

• IRS Publication 575, Pension and Annuity Income (2025): Railroad Retirement Benefits; Form RRB-1099-R boxes 3 to 9; Repayment of benefits received in an earlier year; Withholding Tax and Estimated Tax. Read November 2, 2026.

Edition read: Publication 575 (2025), for use in preparing 2025 returns. Dollar limits and dates in this publication are for 2025; check the current publication and form instructions for your tax year. This page summarizes the publication and does not replace it.