U.S. · Payroll tax forms
Form 940 line 11, FUTA credit reduction.
Where the Schedule A total goes, when line 11 is skipped, and what it means for deposits.
Line 11 is for credit reduction. If you paid FUTA taxable wages that were also subject to state unemployment tax in a state subject to credit reduction, enter the total from Schedule A (Form 940) on line 11. Skip it if you entered an amount on line 9. A credit reduction state is one that has not repaid money borrowed from the federal government for unemployment benefits; the U.S. Department of Labor determines which states.
Look up a Form 940 Line 11 item
Result
Form 940 Line 11 at a glance (2025 edition)
| Item | Meaning | What the IRS says |
|---|---|---|
| Line 11 | Schedule A total | If you paid FUTA taxable wages also subject to state unemployment taxes in states subject to credit reduction, enter the total amount from Schedule A (Form 940) |
| Skip when | Line 9 applies | If you entered an amount on line 9 because all FUTA taxable wages were excluded from state unemployment tax, skip line 11 and go to line 12 |
| Credit reduction state | State has unpaid federal loans | A state that has not repaid money it borrowed from the federal government to pay unemployment benefits. The U.S. Department of Labor determines these states |
| Line 2 | Check the box | If you paid wages subject to the unemployment tax laws of a credit reduction state, check the box on line 2 and fill out Schedule A |
| Line 12 | Adds lines 8 to 11 | Total FUTA tax after adjustments is the sum of lines 8, 9, 10 and 11 |
| Deposit | Include with Q4 | In years when there are credit reduction states, you must include liabilities owed for credit reduction with your fourth quarter deposit |
| Order | Read line 9 first | See the instructions for line 9 before completing Schedule A (Form 940) |
Which states and what rates?
This page does not list states or rates. The instructions for 2025 say that for 2025 there are credit reduction states, and they point to the Schedule A (Form 940) instructions and IRS.gov for the specifics, because the list and the add-on rates are set each year by the Department of Labor. Use the current Schedule A instructions for the actual list.
Why line 11 raises your bill
Normal FUTA assumes a credit of up to 5.4% for state unemployment tax paid. If your state is a credit reduction state, that credit is reduced for wages subject to that state’s law, so you owe additional federal tax. Schedule A figures that extra amount, and line 11 carries it onto Form 940.
Deposits
The instructions say credit reduction liability is included with your fourth-quarter FUTA deposit.
Worked example
The instructions do not give a numeric credit reduction example, so this page does not invent one. The sequence is: check line 2, complete Schedule A with your wages subject to each credit reduction state, copy the Schedule A total to line 11, and add it on line 12 to lines 8, 9 and 10. The FUTA credit reduction calculator on this site can estimate an amount.
More pages in this set
Related decoder pages: Form 940 Line 3, Form 940 Line 9.
Sources
- Instructions for Form 940 (2025): the line-by-line and code instructions summarized on this page. Page last reviewed or updated April 30, 2026. Read November 2, 2026.
Edition: Instructions for Form 940 (2025). Line numbers, codes, dollar limits and rates are those printed in that edition and change by year. Names in worked examples are made up.
Frequently asked questions
What goes on Form 940 line 11?
The total amount from Schedule A (Form 940) if you paid FUTA taxable wages that were also subject to state unemployment taxes in states subject to credit reduction.
When do I skip line 11?
If you entered an amount on line 9 because all the FUTA taxable wages you paid were excluded from state unemployment tax, skip line 11 and go to line 12.
What is a credit reduction state?
A state that has not repaid money it borrowed from the federal government to pay unemployment benefits. The U.S. Department of Labor determines which states.
When is credit reduction deposited?
The instructions say to include liabilities owed for credit reduction with your fourth quarter deposit.
How does line 11 affect line 12?
Line 12, total FUTA tax after adjustments, adds lines 8, 9, 10 and 11, so line 11 increases the total.
Not tax advice
This page summarizes IRS instructions, mostly written for the people who prepare the form, and is not tax, legal or financial advice. A CPA, an enrolled agent or a payroll professional can confirm what a line or code means for your filing. Everything runs in your browser; nothing you enter is sent anywhere.