# 26 U.S.C. § 3221: Rate of tax

Source: OLRC release point 119-134 <https://uscode.house.gov/us/usc/119-134/t26/s3221>. Cite pinpoints as 26 U.S.C. § 3221(a)(1).

## § 3221(a) Tier 1 tax

In addition to other taxes, there is hereby imposed on every employer an excise tax, with respect to having individuals in his employ, equal to the applicable percentage of compensation paid during any calendar year by such employer for services rendered to such employer. 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 3111 for the calendar year.

## § 3221(b) Tier 2 tax

In addition to other taxes, there is hereby imposed on every employer an excise tax, with respect to having individuals in his employ, equal to the percentage determined under section 3241 for any calendar year of the compensation paid during such calendar year by such employer for services rendered to such employer.

## § 3221(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).

## Regulations

- [Treas. Reg. § 31.3221-1](/26/reg/31.3221-1.md): Measure of employer tax. (interprets § 3221)
- [Treas. Reg. § 31.3221-2](/26/reg/31.3221-2.md): Rates and computation of employer tax. (interprets § 3221)
- [Treas. Reg. § 31.3221-3](/26/reg/31.3221-3.md): Supplemental tax. (interprets § 3221)
- [Treas. Reg. § 31.3221-4](/26/reg/31.3221-4.md): Exception from supplemental tax. (interprets § 3221)
- [Treas. Reg. § 31.3221-5](/26/reg/31.3221-5.md): Recapture of credits under the Families First Coronavirus Response Act and the Coronavirus Aid, Relief, and Economic Security Act. (interprets § 3221)

## Final rules

- [88 FR 48118](https://www.federalregister.gov/documents/2023/07/26/2023-15690/recapture-of-certain-excess-employment-tax-credits-under-covid-19-legislation) (2023): Recapture of Certain Excess Employment Tax Credits Under COVID-19 Legislation
- [64 FR 42831](https://www.federalregister.gov/documents/1999/08/06/99-19936/exception-from-supplemental-annuity-tax-on-railroad-employers) (1999): Exception From Supplemental Annuity Tax on Railroad Employers

## Leading cases

- [Atchison, Topeka & Santa Fe Ry. Co. v. United States, 61 Fed. Cl. 84 (Fed. Cl. 2004)](https://www.courtlistener.com/opinion/6770005/atchison-topeka-santa-fe-railway-co-v-united-states/)

## Proposed regulations (not in force)

- [Prop. Treas. Reg. § 31.3221-5](/26/prop/31.3221-5_2024-14167.md): Recapture of credits under the Families First Coronavirus Response Act and the Coronavirus Aid, Relief, and Economic Security Act. (REG-109032-23, proposed 2024-07-02)

## Connections

Cites: § 3111 Rate of tax; § 3231 Definitions; § 3241 Determination of tier 2 tax rate based on average account benefits ratio

Cited by: § 72 Annuities; certain proceeds of endowment and life insurance contracts; § 3131 Credit for paid sick leave; § 3132 Payroll credit for paid family leave; § 3133 Special rule related to tax on employers; § 3134 Employee retention credit for employers subject to closure due to COVID–19; § 6432 Continuation coverage premium assistance

Derived from: 1939 § 1520

## Amendments

- 1954-08-16: [Act Aug. 16, 1954, ch. 736](/26/act/1954-ch736.md), 68A Stat. 433
- 1954-08-31: [Act Aug. 31, 1954, ch. 1164](/26/act/1954-ch1164.md), 68 Stat. 1040
- 1959-05-19: [Pub. L. 86-28](/26/act/86-28.md), 73 Stat. 29
- 1963-10-05: [Pub. L. 88-133](/26/act/88-133.md), 77 Stat. 221
- 1965-07-30: [Pub. L. 89-97](/26/act/89-97.md), 79 Stat. 335
- 1965-09-29: [Pub. L. 89-212](/26/act/89-212.md), 79 Stat. 861
- 1966-10-30: [Pub. L. 89-699](/26/act/89-699.md), 80 Stat. 1078
- 1966-10-30: [Pub. L. 89-700](/26/act/89-700.md), 80 Stat. 1088
- 1970-03-17: [Pub. L. 91-215](/26/act/91-215.md), 84 Stat. 71
- 1973-07-10: [Pub. L. 93-69](/26/act/93-69.md), 87 Stat. 162
- 1974-10-16: [Pub. L. 93-445](/26/act/93-445.md), 88 Stat. 1359
- 1975-08-09: [Pub. L. 94-93](/26/act/94-93.md), 89 Stat. 466
- 1976-10-04: [Pub. L. 94-455](/26/act/94-455.md), 90 Stat. 1808
- 1981-08-13: [Pub. L. 97-34](/26/act/97-34.md), 95 Stat. 347
- 1983-08-12: [Pub. L. 98-76](/26/act/98-76.md), 97 Stat. 419
- 1987-12-22: [Pub. L. 100-203](/26/act/100-203.md), 101 Stat. 1330
- 1990-11-05: [Pub. L. 101-508](/26/act/101-508.md), 104 Stat. 1388
- 2001-12-21: [Pub. L. 107-90](/26/act/107-90.md), 115 Stat. 891
- 2010-03-18: [Pub. L. 111-147](/26/act/111-147.md), 124 Stat. 74
- 2014-12-19: [Pub. L. 113-295](/26/act/113-295.md), 128 Stat. 4052
- 2018-03-23: [Pub. L. 115-141](/26/act/115-141.md), 132 Stat. 1204