Form 940 Calculator
Work out your FUTA tax for Form 940: wage base, state credit, credit reduction states and when to deposit.
Form 940 FUTA tax calculator
What Form 940 is
Form 940 is the employer's annual Federal Unemployment Tax Act (FUTA) return. FUTA is paid only by employers, never withheld from pay, and funds unemployment benefits along with state programs. You file it if you paid $1,500 or more in wages in any calendar quarter, or had an employee for some part of a day in 20 or more weeks; household and farm employers have their own tests. The 2026 Form 940 is due February 1, 2027 (January 31 is a Sunday), or February 10 if all FUTA tax was deposited on time.
How FUTA tax is figured
The FUTA rate is 6.0% on the first $7,000 of each employee's wages for the year. Employers who pay state unemployment tax in full and on time get a credit of up to 5.4%, so the usual net rate is 0.6%, or $42.00 per employee.
Credit reduction states (Schedule A)
If a state has had a federal unemployment loan outstanding for two or more years, its employers lose part of the credit, reported on Schedule A. For 2025 the Department of Labor named California (1.2%) and the US Virgin Islands (4.5%). A California employer therefore paid 1.8% on $7,000, $126.00 per employee. The 2026 list is announced in November 2026; enter your state's rate above once it's published.
Deposits
Work out FUTA tax each quarter. If what you owe (plus anything carried forward) is more than $500, deposit it by the last day of the month after the quarter through EFTPS; if it's $500 or less, carry it to the next quarter. Quarterly Social Security, Medicare and income tax withholding go on Form 941. See also the 1099 vs W2 calculator and the Form 2553 S corp calculator.
Common questions
What is the FUTA tax rate?
6.0% on the first $7,000 of each employee's wages, usually 0.6% after the 5.4% state credit.
How much FUTA tax per employee?
Usually $42 a year; $126 for a California employer for 2025 because of its 1.2% credit reduction.
When is Form 940 due?
January 31, or the next business day: February 1, 2027 for the 2026 return.
When do I deposit FUTA tax?
Quarterly, when the amount owed is more than $500.
Sources
- IRS: About Form 940
- IRS Topic 759: Form 940, FUTA tax return
- Payroll.org: California, Virgin Islands face FUTA credit reduction for 2025
More paycheck and tax calculators: Form 8962 Calculator · Form 8995 Calculator · Illinois Alimony Calculator · IRS Form 1040 ES Calculator
Related
General information, not financial, tax or legal advice. Check important numbers with the official source before acting on them.