U.S. · Payroll tax forms
Form 940 line 9, all wages excluded from state tax.
The 6.0% full-rate case, the 0.054 adjustment, and the 0% experience-rate trap.
Line 9 applies only if all the taxable FUTA wages you paid were excluded from state unemployment tax. Multiply line 7 by 0.054 and enter the result. You then owe FUTA at the full 6.0% rate because you have no state credit. If line 9 applies, leave lines 10 and 11 blank. It does not apply when you owe no state tax only because the state gave you a 0% rate.
Look up a Form 940 Line 9 item
Result
Form 940 Line 9 at a glance (2025 edition)
| Item | Meaning | What the IRS says |
|---|---|---|
| Line 9 | Line 7 x 0.054 | If all taxable FUTA wages were excluded from state unemployment tax, multiply line 7 by 0.054 and enter the result on line 9 |
| Why 0.054 | Maximum credit not earned | Line 8 was figured with the maximum allowable credit (5.4%) for state unemployment tax. With no state tax paid there is no credit, so this adjustment is needed |
| Rate then owed | 6.0% (0.060) | If you were not required to pay state unemployment tax because all wages were excluded, you pay FUTA tax at the full 6.0% rate |
| Example of excluded wages | Officers or specific occupations | For example, where state law excludes wages paid to corporate officers or employees in specific occupations and those were the only wages paid |
| Not for 0% rates | Caution | Line 9 does not apply to FUTA wages on which you paid no state unemployment tax only because the state assigned you a tax rate of 0% |
| Lines 10 and 11 | Leave blank | If line 9 applies, lines 10 and 11 do not apply. Do not fill out the credit worksheet |
| Schedule A | Multi-state only | Complete Schedule A (Form 940) only if you are a multi-state employer |
How lines 8 and 9 add up to 6.0%
Line 8 is line 7 times 0.006, the 0.6% net FUTA rate that assumes you get the full 5.4% state credit. Line 9 adds back the 5.4% when no credit is available. Together they are 6.0% of taxable FUTA wages. Line 12, total FUTA tax after adjustments, adds lines 8, 9, 10 and 11, and the instructions caution that if line 9 is greater than zero, lines 10 and 11 must be zero.
Line 9 versus line 10
Line 10 is a different case: some, not all, of your taxable FUTA wages were excluded from state unemployment tax, or some state payments were late. That case uses the worksheet in the instructions. Line 9 is the all-or-nothing case with no worksheet.
The 0% rate trap
A state can assign a 0% experience rate, so you pay no state tax even though your wages are covered by the state system. The instructions say that is not a line 9 situation, because the wages were not excluded; they were just taxed at zero. If you are unsure which line applies, read the line 10 instructions and worksheet.
Worked example
A made-up S corporation paid only officer wages, which its state excludes from state unemployment tax. Line 7 (total taxable FUTA wages) is $6,000 for one officer. Line 8 is $6,000 x 0.006 = $36. Line 9 is $6,000 x 0.054 = $324. Line 12 is $36 + $324 = $360, which is 6.0% of $6,000. Lines 10 and 11 stay blank. Figures are illustrative only.
More pages in this set
Related decoder pages: Form 940 Line 3, Form 940 Line 11.
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 is Form 940 line 9?
The adjustment for when all the taxable FUTA wages you paid were excluded from state unemployment tax. You multiply line 7 by 0.054 and enter the result.
What FUTA rate do I pay if line 9 applies?
The full 6.0% (0.060), because you have no state unemployment tax credit.
Does line 9 apply if my state gave me a 0% rate?
No. The instructions say it does not apply to wages on which you paid no state tax only because the state assigned you a 0% rate.
What do I do about lines 10 and 11 if I use line 9?
Leave them blank. The instructions say that if line 9 applies, lines 10 and 11 do not apply.
Do I need Schedule A?
Complete Schedule A (Form 940) only if you are a multi-state employer.
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.