Instructions for Form 940 - Employer’s Annual Federal Unemployment (FUTA) Tax Return - 2025

Sep 19, 2026

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Instructions for Form 940 (2025) explain how employers report and pay the Federal Unemployment (FUTA) tax, including updates for 2025. Guidance covers who must identify as aggregate return filers and how to use the new Aggregate Return Filers Only section, plus options for direct deposit of refunds. The instructions also address electronic payment of balance due, electronic availability of return transcripts, credit reduction states and Schedule A calculations, and key reminders such as amended e-filing and Spanish availability.

LanguageEnglish

CategoryForms

FormatPDF

Pages16

Reading Time6 min

AccessFree to download

What’s New

Aggregate return filers

Direct deposit of Form 940 refund

Make balance due payments electronically

Form 940 return transcripts electronically

Credit Reduction State

Credit reduction rate and Schedule A (Form 940)

Reminders

Electronically filing an amended Form 940

Spanish version of Form 940 (sp)

Moving expense and bicycle commuting reimbursements

2025 Instructions for Form 940 Employer’s Annual Federal Unemployment (FUTA) Tax Return Section references are to the Internal Revenue Code unless otherwise noted. Future Developments For the latest information about developments related to Form 940 and its instructions, such as legislation enacted after they were published, [go to](go to IRS.gov/Form940)[ ](go to IRS.gov/Form940)[IRS.gov/Form940](go to IRS.gov/Form940) . What’s New Aggregate return filers must identify themselves. Aggregate return filers must use the new Aggregate Return Filers Only section on Form 940 to identify whether they’re filing an aggregate return as a section 3504 agent, certified professional employer organization (CPEO), or other third party. For more information about these types of aggregate return filers, see Certification program for professional employer organizations (PEOs) and Aggregate Form 940 filers , later. For more information about completing this new section on Form 940, see Aggregate Return Filers Only, later. Direct deposit of Form 940 refund is now available. Executive Order (EO) 14247, Modernizing Payments To and From America’s Bank Account, issued on March 25, 2025, promotes operational efficiency by mandating the transition to electronic payments for all federal disbursements. Accordingly, the IRS will now issue Form 940 tax refunds by direct deposit. Direct deposit is a fast, simple, safe, and secure way to have your refund deposited automatically to your checking or savings account. Instead of a direct deposit refund, you can still choose to have your Form 940 overpayment applied to your next return by checking the appropriate box online 15b. For more information, see the instructions for line 15b and Direct Deposit, later. Make balance due payments electronically. EO 14247 also promotes operational efficiency by mandating the transition to electronic payments for all payments made to the federal government. Therefore, pay your balance due on Form 940 electronically. There are several easy, safe, and secure ways to pay your balance due electronically. For more information, see the instructions for line 14 , later. Form 940 return transcripts are now available electronically. You can now access your Form 940 return transcript for tax years 2023 and later using your IRS business tax account. For more information, go to [IRS.gov/BusinessTranscript](IRS.gov/BusinessTranscript. To access your)[. To access your](IRS.gov/BusinessTranscript. To access your) IRS business tax account, [go to](go to IRS.gov/BusinessAccount)[ ](go to IRS.gov/BusinessAccount)[IRS.gov/BusinessAccount](go to IRS.gov/BusinessAccount). Credit reduction state. A state that hasn’t repaid money it borrowed from the federal government to pay unemployment benefits is called a credit reduction state. The U.S. Department of Labor determines these states. If an employer pays wages that are subject to the unemployment tax laws of a credit reduction state, that employer must pay additional federal unemployment tax when filing its Form 940. For 2025, there are credit reduction states. If you paid any wages that are subject to the unemployment compensation laws of a credit reduction state, your credit against federal unemployment tax will be reduced based on the credit reduction rate for that credit reduction state. Use Schedule A (Form 940) to figure the credit reduction. For more information, see the Schedule A (Form 940) [instructions or go to IRS.gov](instructions or go to IRS.gov). Reminders Electronically filing an amended Form 940. The IRS offers filing an amended Form 940 as part of Modernized e-File (MeF) . For more information on electronic filing, go[to](to IRS.gov/EmploymentEfile)[ ](to IRS.gov/EmploymentEfile)[IRS.gov/EmploymentEfile](to IRS.gov/EmploymentEfile). Form 940 (sp) available in Spanish. All employers, including employers in Puerto Rico and the U.S. Virgin Islands, have the option to file Form 940 (sp) . Movi

FAQs

What is new for 2025 regarding aggregate return filers on Form 940?

Aggregate return filers must identify themselves and use the new Aggregate Return Filers Only section to state whether they are filing as a section 3504 agent, a CPEO, or another third party.

How can an employer receive a Form 940 refund in 2025?

The IRS provides direct deposit for Form 940 refunds, allowing the refund to be deposited automatically into a checking or savings account.

How do credit reduction states affect an employer’s FUTA credit for 2025?

If wages are subject to unemployment tax laws of a credit reduction state, the credit against federal unemployment tax is reduced using the credit reduction rate, determined via Schedule A (Form 940).

What reminder guidance applies to filing an amended Form 940?

An amended Form 940 can be filed electronically as part of Modernized e-File (MeF), following the electronic filing guidance provided.

Sep 19, 2026

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