Form 940 (Schedule A) — Multi-State Employer and Credit Reduction Information

Official source: IRS Forms, Instructions & Publications (https://www.irs.gov/pub/irs-pdf/f940sa.pdf), retrieved 2026-10-03. U.S. Government work (17 U.S.C. § 105).

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Multi-State Employer and Credit Reduction Information Department of the Treasury — Internal Revenue Service

860312

OMB No. 1545-0029

See the instructions on page 2. File this schedule with Form 940.

For Paperwork Reduction Act Notice, see Page 2. Cat. No. 16997C Schedule A (Form 940) 2025 Created 11/12/25

Multi-State Employer and Credit Reduction Information

Specific Instructions: Completing Schedule A

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Step 1. Place an “X” in the box of every state (including the District of Columbia, Puerto Rico, and the U.S. Virgin Islands) in which you had to pay state unemployment taxes this year, even if the state’s credit reduction rate is zero. Note: Make sure that you have applied for a state reporting number for your business. If you don’t have an unemployment account in a state in which you paid wages, contact the state unemployment agency to receive one. For a list of state unemployment agencies, visit the U.S. Department of Labor’s website at https://oui.doleta.gov/unemploy/agencies.asp . The table below provides the two-letter postal abbreviations used on Schedule A.

State

Step 3. Total credit reduction To calculate the total credit reduction, add up all of the Credit Reduction boxes and enter the amount in the Total Credit Reduction box. Then enter the total credit reduction on Form 940, line 11.

Example 1 You paid $20,000 in wages to each of three employees in State A. State A is subject to credit reduction at a rate of 0.012 (1.2%). Because you paid wages in a state that is subject to credit reduction, you must complete Schedule A and file it with Form 940.

Total payments to all employees in State A . . . . . . $60,000

Payments exempt from FUTA tax (see the Instructions for Form 940) . . . . . . . . . . $0

Total payments made to each employee in excess of $7,000 (3 x ($20,000 - $7,000)) . . . . . . . $39,000

Total FUTA taxable wages you paid in State A entered in the FUTA Taxable Wages box ($60,000 - $0 - $39,000) . . . $21,000

Credit reduction rate for State A . . . . . . . . . 0.012

Total credit reduction for State A ($21,000 x 0.012) . . . . $252.00 Caution: Don’t include in the FUTA Taxable Wages box wages in excess of the $7,000 wage base for each employee subject to state unemployment insurance in the credit reduction state. The credit reduction applies only to FUTA taxable wages that were also subject to state unemployment tax. In this case, you would enter $252.00 in the Total Credit Reduction box and then enter that amount on Form 940, line 11.

Example 2 You paid $48,000 ($4,000 a month) in wages to Mary Smith and no payments were exempt from FUTA tax. Mary worked in State B (not subject to credit reduction) in January and then transferred to State C (subject to credit reduction) on February 1. Because you paid wages in more than one state, you must complete Schedule A and file it with Form 940. The total payments in State B that aren’t exempt from FUTA tax are $4,000. Because this payment to Mary doesn’t exceed the $7,000 FUTA wage base, the total FUTA taxable wages paid in State B are $4,000. The total payments in State C that aren’t exempt from FUTA tax are $44,000. However, $4,000 of FUTA taxable wages was paid in State B with respect to Mary. Therefore, the total FUTA taxable wages with respect to Mary in State C are $3,000 ($7,000 (FUTA wage base) - $4,000 (total FUTA taxable wages paid in State B)). Enter $3,000 in the FUTA Taxable Wages box, multiply it by the reduction rate, and then enter the result in the Credit Reduction box. Attach Schedule A to Form 940 when you file your return.

Paperwork Reduction Act Notice. We ask for the information on Schedule A to carry out the Internal Revenue laws of the United States. You’re required to give us the information. We need it to ensure that you are complying with these laws and to allow us to figure and collect the right amount of tax. You’re not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential, as required by section 6103. The time needed to complete and file Schedule A will vary depending on individual circumstances. The estimated burden for employers filing Schedule A is approved under OMB control number 1545-0029 and is included in the estimates shown in the instructions for their employment tax return.

State

Postal Abbreviation

Postal Abbreviation

Alabama AL Alaska AK Arizona AZ Arkansas AR California CA Colorado CO Connecticut CT Delaware DE District of Columbia DC

Florida FL Georgia GA Hawaii HI Idaho ID Illinois IL Indiana IN Iowa IA Kansas KS Kentucky KY

Louisiana LA Maine ME Maryland MD Massachusetts MA Michigan MI Minnesota MN Mississippi MS Missouri MO

Montana MT Nebraska NE Nevada NV New Hampshire NH New Jersey NJ New Mexico NM New York NY North Carolina NC North Dakota ND

Ohio OH Oklahoma OK Oregon OR Pennsylvania PA Rhode Island RI South Carolina SC South Dakota SD Tennessee TN Texas TX

Utah UT Vermont VT Virginia VA Washington WA West Virginia WV Wisconsin WI Wyoming WY Puerto Rico PR U.S. Virgin Islands VI

Credit reduction states for 2025. The credit reduction rate for California is 0.012 (1.2%). The credit reduction rate for the U.S. Virgin Islands is 0.045 (4.5%). Step 2. You’re subject to credit reduction if you paid FUTA taxable wages that were also subject to state unemployment taxes in any state listed that has a credit reduction rate greater than zero. In the FUTA Taxable Wages box, enter the total FUTA taxable wages that you paid in any state that is subject to credit reduction. (The FUTA wage base for all states is $7,000.) However, don’t include in the FUTA Taxable Wages box wages that were excluded from state unemployment tax. For example, if you paid $5,000 in FUTA taxable wages in a credit reduction state but $1,000 of those wages was excluded from state unemployment tax, report $4,000 in the FUTA Taxable Wages box. Note: Don’t enter your state unemployment wages in the FUTA Taxable Wages box. Enter the reduction rate and then multiply the total FUTA taxable wages by the reduction rate. Enter your total in the Credit Reduction box at the end of the line.

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