Under the cost-cutting plan, the Army will be down to 450,000 soldiers at the end of the 2017 budget year, even though in 2013 it argued in budgetary documents that going below 450,000 troops might mean it could not win a war, USA Today said.
By comparison, the Army swelled to 570,000 men and women during the peak of fighting in Iraq and Afghanistan, the newspaper said.
Some 17,000 civilians working for the Army will also be laid off, the official told AFP, confirming the USA Today report.
The paper quoted a document it had obtained and said the cuts are being made to save money.
It will affect virtually every Army post domestically and abroad, USA Today said
The defense official told AFP that the Army plans to announce the cuts soon, with USA Today adding that the matter would be addressed this week.
Across-the-board government budget cuts are due to kick in in October and if Congress does not avert these the Army will have to lay off another 30,000 soldiers on top of the 40,000, according to the document quoted by USA Today.
It comes just a day after President Barack Obama said that the US-led coalition fighting the Islamic State group would step up its campaign in Syria, while cautioning a long battle remained.
Brigades stationed at Fort Benning in Georgia and Joint Base Elmendorf-Richardson in Alaska will be among those downsized, USA Today said.
Senator Dan Sullivan, a Republican from Alaska, told the paper that the cutdown “makes no strategic sense.”
More than a year after IS fighters overran much of Iraq and Syria, the United States and its allies are struggling to turn the tide against the extremists in an air campaign known as Operation Inherent Resolve.
The Pentagon last month said it was sending 450 additional US troops to act as advisers to help Iraqi forces seize back control of the western city of Ramadi from jihadist fighters.
Speaking to reporters after a briefing at the Pentagon on Monday, Obama warned the war “will not be quick. This is a long-term campaign.”
He added that more needed to be done to train government forces and Sunni tribal fighters in Iraq, as well as moderate Syrian rebels.