2025 FUTA Wage Base

Who it applies to

FUTA is an employer tax. The instructions say only employers pay it, and that you must not collect or deduct it from your employees' wages. You file Form 940 for 2025 if you paid wages of at least the quarterly amount the instructions state to employees in any calendar quarter during 2024 or 2025, or if you had one or more employees for at least some part of a day in as many different weeks as the instructions specify in either of those years, counting full-time, part-time, and temporary employees but not partners in a partnership. Separate tests apply to household employers and to agricultural employers. Services performed for a state, or a political subdivision or instrumentality of a state, are exempt and no Form 940 is required, as are services for a federally recognized Indian tribal government employer under section 3309, and religious, educational, scientific, charitable, and similar organizations described in section 501 are generally not subject to FUTA tax.

What changed this year, and why

The FUTA wage base for 2025 is $7,000. The 2025 Instructions for Form 940 state that the FUTA tax applies to the first $7,000 you pay to each employee during a calendar year after subtracting any payments exempt from FUTA tax, and the instructions for line 5 give that figure its name: the FUTA wage base. Nothing in the What's New and Reminders items for 2025 moves it. Those items cover direct deposit of a Form 940 refund, which is now available; credit reduction states, which change the credit an employer takes against federal unemployment tax rather than the wages the tax is measured on; and the treatment of moving expense and bicycle commuting reimbursements, which are not exempt from FUTA tax.

Common questions

What is the FUTA wage base for 2025?

It is $7,000. The FUTA tax applies to the first $7,000 you pay to each employee during the calendar year, after subtracting any payments exempt from FUTA tax. Wages above that point are still reported on line 3 of Form 940 as total payments, but they come back out on line 5 as payments made to each employee in excess of the wage base, so they are not part of the taxable FUTA wages you carry to line 7.

Is the $7,000 FUTA wage base per employee or per employer?

It is measured per employee, and each employer applies it to its own payroll. The instructions work through an example where each employee's wages are counted separately against the $7,000 before the excess is subtracted. One exception is a successor employer: when figuring the payments made to each employee in excess of the wage base, you may include payments the predecessor made to employees who continue to work for you, but only if the predecessor was itself an employer required to file Form 940.

Who must file Form 940 for 2025?

You must file if you paid wages of at least the quarterly threshold the instructions state to employees in any calendar quarter during 2024 or 2025, or if you had one or more employees for at least some part of a day in the number of different weeks the instructions specify in either year. Count full-time, part-time, and temporary employees, but not the partners of a partnership. If a business was sold or transferred during the year, each employer meeting a test files its own Form 940.

When is Form 940 for 2025 due?

The due date for filing Form 940 for 2025 is February 2, 2026. If you deposited all your FUTA tax when it was due, you may file by February 10, 2026 instead. A return received later is still treated as filed on time if the envelope is properly addressed, carries sufficient postage, and is postmarked by the U.S. Postal Service, or sent by an IRS-designated private delivery service, on or before the due date.

Which payments are exempt from FUTA tax?

The instructions list fringe benefits such as the value of certain meals and lodging, employer contributions to accident or health plans including certain payments to a health savings account or an Archer MSA, and benefits excluded under a cafeteria plan. Group-term life insurance and certain employer retirement contributions can also be exempt. You report these on line 4 and check the boxes that describe them, but only if you already included the payment in total payments on line 3.

Do I pay FUTA tax on household employees?

Only if you paid cash wages of at least the quarterly amount the instructions state in any calendar quarter in 2024 or 2025. Even then, household employers generally file Schedule H (Form 1040) rather than Form 940. If you also have other employees, you may choose to include the household employees on your Form 940 instead, but if you do, you must also file Form 941, Form 943, or Form 944 to report social security, Medicare, and any withheld federal income taxes for them.

What is a credit reduction state, and does it change the wage base?

A credit reduction state is one that has not repaid money it borrowed from the federal government to pay unemployment benefits; the U.S. Department of Labor determines which states these are. If you paid wages subject to the unemployment compensation laws of such a state, your credit against federal unemployment tax is reduced and you owe additional federal unemployment tax. The reduction acts on the credit, not on the $7,000 wage base, and you figure it on Schedule A (Form 940).

How do I figure my FUTA tax liability for a quarter?

Add up the first $7,000 of each employee's annual wages that you actually paid during that quarter, then multiply that total by the rate the instructions give for line 8. That rate assumes you receive the maximum credit, which you are entitled to if you paid all state unemployment tax by the due date of your Form 940 or were not required to pay state unemployment tax because of your state experience rate. Wages not subject to state unemployment tax can be taxed at the higher rate instead.

Every amount on this page is a published figure rather than yours. The FUTA wage base headroom takes the number you enter and works it out against them, showing which published figure it used.