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 on line 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 elec- tronically. 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 . To access your IRS business tax account, 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.