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Railroad Retirement Benefits: Pension and Annuity Taxes (2025 IRS Guide)

This guide covers “Railroad Retirement Benefits” within pension and annuity taxes. The following material presents the IRS treatment of this topic, including the qualifications, exceptions, and examples in the source section. Read the rules alongside the facts of your own situation before deciding what to report, deduct, or document.

Adapted from Publication 575 (2025), Pension and Annuity Income, published by the Internal Revenue Service. This guide retains the source edition’s years, amounts, deadlines, and examples. It is guidance for that edition, not a statement that the same figures apply to every tax year.

Railroad Retirement Benefits

Benefits paid under the Railroad Retirement Act fall into two categories. These categories are treated differently for income tax purposes.

The first category is the amount of tier 1 railroad retirement benefits that equals the social security benefit that a railroad employee or beneficiary would have been entitled to receive under the social security system. This part of the tier 1 benefit is the social security equivalent benefit (SSEB) and you treat it for tax purposes as social security benefits. If you received, repaid, or had tax withheld from the SSEB portion of tier 1 benefits during 2025, you will receive Form RRB-1099, Payments by the Railroad Retirement Board (or Form RRB-1042S, Statement for Nonresident Alien Recipients of Payments by the Railroad Retirement Board, if you are a nonresident alien), from the U.S. Railroad Retirement Board (RRB).

For more information about the tax treatment of the SSEB portion of tier 1 benefits and Forms RRB-1099 and RRB-1042S, see Pub. 915.

The second category contains the rest of the tier 1 railroad retirement benefits called the non-social security equivalent benefit (NSSEB). It also contains any tier 2 benefit, vested dual benefit (VDB), and supplemental annuity benefit. Treat this category of benefits, shown on Form RRB-1099-R, as an amount received from a qualified employee plan. This allows for the tax-free (nontaxable) recovery of employee contributions from the tier 2 benefits and the NSSEB part of the tier 1 benefits. (The NSSEB and tier 2 benefits, less certain repayments, are combined into one amount called the Contributory Amount Paid on Form RRB-1099-R.) VDBs and supplemental annuity benefits are non-contributory pensions and are fully taxable. See Taxation of Periodic Payments, later, for information on how to report your benefits and how to recover the employee contributions tax free. Form RRB-1099-R is used for U.S. citizens, resident aliens, and nonresident aliens.

Nonresident aliens.

A nonresident alien is an individual who isn’t a citizen or a resident alien of the United States. If you are a nonresident alien, you are subject to U.S. tax on your SSEB portion of tier 1 benefits at a 30% rate, unless exempt or subject to a lower treaty rate. See Pub. 519, for more information.

If your rate of tax changed or your country of legal residence changed during the tax year, you may receive more than one Form RRB-1042S or RRB-1099-R. To determine your total benefits paid or repaid and total tax withheld for the year, you should add the amounts shown on all forms you received for that year.

Tax withholding.

To request or change your income tax withholding from SSEB payments, U.S. citizens should contact the IRS for Form W-4V, Voluntary Withholding Request, and file it with the RRB. To elect, revoke, or change your income tax withholding from NSSEB, tier 2, VDB, and supplemental annuity payments received, use Form RRB W-4P. If you are a nonresident alien or a U.S. citizen living abroad, you should provide Form RRB-1001, Nonresident Questionnaire, to the RRB to furnish citizenship and residency information and to claim any treaty exemption from U.S. tax withholding. Nonresident U.S. citizens can’t elect to be exempt from withholding on payments delivered outside the United States.

Help from the RRB.

To request an RRB form or to get help with questions about an RRB benefit, you should contact your nearest RRB field office if you reside in the United States (call 877-772-5772 for the nearest field office) or U.S. Consulate/Embassy if you reside outside the United States. You can visit the RRB on the Internet at RRB.gov.

Form RRB-1099-R.

The following discussion explains the items shown on Form RRB-1099-R. The amounts shown on this form are before any deduction for:

  • Federal income tax withholding;

  • Medicare premiums;

  • Legal process garnishment payments;

  • Recovery of a prior-year overpayment of an NSSEB, tier 2 benefit, VDB, or supplemental annuity benefit; or

  • Recovery of Railroad Unemployment Insurance Act benefits received while awaiting payment of your railroad retirement annuity.

The amounts shown on this form are after any offset for:

  • Social security benefits;

  • Age reduction;

  • Public service pensions or public disability benefits;

  • Dual railroad retirement entitlement under another RRB claim number;

  • Work deductions;

  • Legal process partition deductions;

  • Actuarial adjustment;

  • Annuity waiver; or

  • Recovery of a current-year overpayment of NSSEB, tier 2 benefits, VDB, or supplemental annuity benefits.

The amounts shown on Form RRB-1099-R don’t reflect any special rules, such as capital gain treatment or the special 10-year tax option for lump-sum payments, or tax-free rollovers. To determine if any of these rules apply to your benefits, see the discussions about them later.

Generally, amounts shown on your Form RRB-1099-R are considered a normal distribution. Use distribution code “7” if you are asked for a distribution code. Distribution codes aren’t shown on Form RRB-1099-R.

There are three copies of this form. Copy B is to be included with your income tax return if federal income tax is withheld. Copy C is for your own records. Copy 2 is filed with your state, city, or local income tax return when required. See the illustrated Copy B (Form RRB-1099-R), later.

.Each beneficiary will receive their own Form RRB-1099-R. If you receive benefits on more than one railroad retirement record, you may get more than one Form RRB-1099-R. So that you get your form timely, make sure the RRB always has your current mailing address..

Form RRB-1099-R Annuities or Pensions by the Railroad Retirement Board 2024

Form RRB-1099-R Annuities or Pensions by the Railroad Retirement Board 2024

Summary: This is an example of Form RRB-1099-R 2024 with these line items to be completed by the railroad retirement board with information regarding annuity and pension payments:

  • "1. Claim number and Payee Code" field
  • "2. Recipient’s Identification Number" field
  • "Recipient’s Name, Street Address, City, State, and ZIP Code" field
  • "Recipient’s Name, Street Address, City, State, and ZIP Code" field
  • "3. Employee Contribution Amount" field
  • "4. Contributory Amount Paid" field
  • "5. Vested Dual Benefit" field
  • "6. Supplemental Annuity" field
  • "7. Total Gross Paid" field
  • "8. Repayments" field
  • "9. Federal Income Tax Withheld" field
  • "10. Rate of Tax" field
  • "11. Country" field
  • "12. Medicare Premium Total" field

Box 1—Claim Number and Payee Code.

Your claim number is a six- or nine-digit number preceded by an alphabetical prefix. This is the number under which the RRB paid your benefits. Your payee code follows your claim number and is the last number in this box. It is used by the RRB to identify you under your claim number. In all your correspondence with the RRB, be sure to use the claim number and payee code shown in this box.

Box 2—Recipient’s Identification Number.

This is the recipient’s U.S. taxpayer identification number (TIN). It is the social security number (SSN), individual taxpayer identification number (ITIN), or employer identification number (EIN), if known, for the person or estate listed as the recipient.

.If you are a resident or nonresident alien who must furnish a TIN to the IRS and aren’t eligible to obtain an SSN, use Form W-7, Application for IRS Individual Taxpayer Identification Number, to apply for an ITIN. The Instructions for Form W-7 explain how and when to apply. .

Box 3—Employee Contributions.

This is the amount of taxes withheld from the railroad employee’s earnings that exceeds the amount of taxes that would have been withheld had the earnings been covered under the social security system. This amount is the employee’s cost that you use to figure the tax-free part of the NSSEB and tier 2 benefit you received (the amount shown in box 4). (For information on how to figure the tax-free part, see Partly Taxable Payments under Taxation of Periodic Payments, later.) The amount shown is the total employee contribution amount, not reduced by any amounts that the RRB calculated as previously recovered. It is the latest amount reported for 2025 and may have increased or decreased from a previous Form RRB-1099-R. If this amount has changed, the change is retroactive. You may need to refigure the tax-free part of your NSSEB/tier 2 benefit for 2025 and prior tax years. If this box is blank, it means that the amount of your NSSEB and tier 2 payments shown in box 4 is fully taxable.

.If you had a previous annuity entitlement that ended and you are figuring the tax-free part of your NSSEB/tier 2 benefit for your current annuity entitlement, you should contact the RRB for confirmation of your correct employee contribution amount..

Box 4—Contributory Amount Paid.

This is the gross amount of the NSSEB and tier 2 benefit you received in 2025, less any 2025 benefits you repaid in 2025. (Any benefits you repaid in 2025 for an earlier year or for an unknown year are shown in box 8.) This amount is the total contributory pension paid in 2025. It may be partly taxable and partly tax free or fully taxable. If you determine you are eligible to compute a tax-free part, as explained later in Partly Taxable Payments under Taxation of Periodic Payments, use the latest reported employee contribution amount shown in box 3 as the cost.

Box 5—Vested Dual Benefit.

This is the gross amount of VDB payments paid in 2025, less any 2025 VDB payments you repaid in 2025. It is fully taxable. VDB payments you repaid in 2025 for an earlier year or for an unknown year are shown in box 8.

Note:

The amounts shown in boxes 4 and 5 may represent payments for 2025 and/or other years after 1983.

Box 6—Supplemental Annuity.

This is the gross amount of supplemental annuity benefits paid in 2025, less any 2025 supplemental annuity benefits you repaid in 2024. It is fully taxable. Supplemental annuity benefits you repaid in 2025 for an earlier year or for an unknown year are shown in box 8.

Box 7—Total Gross Paid.

This is the sum of boxes 4, 5, and 6. The amount represents the total pension paid in 2025. Include this amount on Form 1040, 1040-SR, or 1040-NR, line 5a.

Box 8—Repayments.

This amount represents any NSSEB, tier 2 benefit, VDB, and supplemental annuity benefit you repaid to the RRB in 2025 for years before 2025 or for unknown years. The amount shown in this box hasn’t been deducted from the amounts shown in boxes 4, 5, and 6. It only includes repayments of benefits that were taxable to you. This means it only includes repayments in 2025 of NSSEB paid after 1985, tier 2 benefits and VDB paid after 1983, and supplemental annuity benefits paid in any year. If you included the benefits in your income in the year you received them, you may be able to deduct the repaid amount. For more information about repayments, see Repayment of benefits received in an earlier year, later.

.You may have repaid an overpayment of benefits by returning a payment, by making a payment, or by having an amount withheld from your railroad retirement annuity payment..

Box 9—Federal Income Tax Withheld.

This is the total federal income tax withheld from your NSSEB, tier 2 benefit, VDB, and supplemental annuity benefit. Include this on your income tax return as tax withheld. If you are a nonresident alien and your tax withholding rate and/or country of legal residence changed during 2025, you will receive more than one Form RRB-1099-R for 2025. Determine the total amount of U.S. federal income tax withheld from your 2025 RRB NSSEB, tier 2, VDB, and supplemental annuity payments by adding the amounts in box 9 of all original 2025 Forms RRB-1099-R, or the latest corrected or duplicate Forms RRB-1099-R you receive.

Box 10—Rate of Tax.

If you are a nonresident alien, an entry in this box indicates the rate at which tax was withheld on the NSSEB, tier 2, VDB, and supplemental annuity payments that were paid to you in 2025. If you are a nonresident alien whose tax was withheld at more than one rate during 2025, you will receive a separate Form RRB-1099-R for each rate change during 2025. If you are taxed as a U.S. citizen or resident alien, this box doesn’t apply to you.

Box 11—Country.

If you are a nonresident alien, an entry in this box indicates the country of which you were a resident for tax purposes at the time you received railroad retirement payments in 2025. If you are a nonresident alien who was a resident of more than one country during 2025, you will receive a separate Form RRB-1099-R for each country of residence during 2025. If you are taxed as a U.S. citizen or resident alien, this box doesn’t apply to you.

Box 12—Medicare Premium Total.

This is for information purposes only. The amount shown in this box represents the total amount of Medicare Part B premiums deducted from your railroad retirement annuity payments in 2025. Medicare premium refunds aren’t included in the Medicare total. The Medicare total is normally shown on Form RRB-1099 (if you are a citizen or resident alien of the United States) or Form RRB-1042S (if you are a nonresident alien). However, if Form RRB-1099 or Form RRB-1042S isn’t required for 2025, then this total will be shown on Form RRB-1099-R. If your Medicare premiums were deducted from your social security benefits, paid by a third party, refunded to you, and/or you paid the premiums by direct billing, your Medicare total won’t be shown in this box.

Repayment of benefits received in an earlier year.

If you had to repay any railroad retirement benefits that you had included in your income in an earlier year because at that time you thought you had an unrestricted right to it, you can deduct the amount you repaid in the year in which you repaid it.

However, if you repaid $3,000 or less, for tax years beginning after 2017, miscellaneous itemized deductions subject to the 2%-of-adjusted-gross-income limit are suspended and therefore not deductible on Schedule A (Form 1040).

If you repaid more than $3,000 in 2025, you can either take a deduction for the amount repaid on Schedule A (Form 1040), line 16, or you can take a credit against your tax. For more information, see Repayments in Pub. 525.

Using the guidance

Keep the documents that establish the dates, amounts, and circumstances described above. References to other chapters, forms, worksheets, or earlier and later sections refer to the linked IRS publication. Check the full publication and its updates before relying on a rule for a different tax year or a situation not addressed here.

Sources and further reading

The cited U.S. government text is in the public domain. Source accessed October 28, 2026. Fynoptic has organized this material for educational use and is independent of, and not endorsed by, the IRS.

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