California Nanny Tax Guide for 2026: Everything You Need to Know

If you employ a nanny in California, you're not just dealing with federal nanny taxes—you've also got state requirements that are among the most complex in the country. Don't worry, though. We'll walk you through exactly what you owe, when it's due, and how to handle it without the headache.

Quick Overview: What California Families Owe

As a household employer in California, you're responsible for:

Federal taxes:

• Social Security (6.2% employer share)
• Medicare (1.45% employer share)
• Federal unemployment (FUTA)
• Federal income tax withholding (if your nanny requests it)

California state taxes:

• State Disability Insurance (SDI)
• Paid Family Leave (PFL, bundled with SDI)
• Employment Training Tax (ETT)
• State Unemployment Insurance (SUI)
• California income tax withholding

That might sound like a lot, but here's the good news: some of these are employee-paid (you just withhold them), and the actual dollar amounts are manageable when you know what you're doing.

When Do California Nanny Taxes Apply?

The federal threshold is $2,700 per year for 2026. If you pay your nanny $2,700 or more in a calendar year, you're a household employer and you owe payroll taxes.

California doesn't have a separate threshold—if you hit the federal limit, you're also subject to California taxes. Even if you pay less than $2,700, you might still owe California unemployment insurance if you pay $1,000 or more in a calendar quarter.

Translation: If you're paying your nanny regularly, you almost certainly owe taxes. Better to know now than deal with back taxes later.

Breaking Down California Nanny Taxes

1. State Disability Insurance (SDI) + Paid Family Leave (PFL)

Who pays? Your nanny (you withhold it from their paycheck)

How much? 1.1% of wages in 2026, up to the state wage base ($168,000 for 2026)

What it covers: Short-term disability and paid family leave benefits

This is money you take out of your nanny's paycheck and send to the state. For example, if your nanny earns $3,000/month, you'd withhold $33/month for SDI/PFL.

2. Employment Training Tax (ETT)

Who pays? You (the employer)

How much? 0.1% of the first $7,000 in wages per employee per year

Max cost: $7 per year

Yes, really. This one is tiny—you'll pay a maximum of $7 annually per employee. It funds California's job training programs.

3. State Unemployment Insurance (SUI)

Who pays? You (the employer)

How much? New employers pay 3.4% on the first $7,000 in wages

Max cost: $238 per year for new employers

Your SUI rate can change over time based on your "experience rating" (basically, whether your employees have filed unemployment claims). Most household employers stay at the new employer rate since nannies rarely file claims.

4. California Income Tax Withholding

Who pays? Your nanny (you withhold it)

How much? Depends on your nanny's income and their Form DE 4 (California withholding certificate)

Unlike federal income tax withholding (which is optional unless your nanny requests it), California requires you to withhold state income tax if your nanny earns more than a certain amount. Use the California withholding schedules or the EDD calculator to figure out the right amount.

What About Federal Taxes?

Don't forget—you still owe all the regular federal nanny taxes on top of California's requirements:

• Social Security: 6.2% employer share (you pay) + 6.2% employee share (you withhold) = 12.4% total
• Medicare: 1.45% employer + 1.45% employee = 2.9% total
• FUTA (Federal Unemployment): 6% on the first $7,000, but you get a credit that usually brings it down to 0.6% ($42/year max)

We cover all of this in detail in our complete nanny tax guide, but the short version: expect to pay about 10-12% on top of your nanny's wages when you factor in employer-side taxes.

California Nanny Tax Deadlines

Here's when everything is due:

Quarterly (Every 3 Months)

State payroll taxes (SDI, SUI, ETT):

• Q1 (Jan-Mar): Due April 30
• Q2 (Apr-Jun): Due July 31
• Q3 (Jul-Sep): Due October 31
• Q4 (Oct-Dec): Due January 31

File these with the California Employment Development Department (EDD) using Form DE 9 and DE 9C.

Federal estimated taxes (if you're not withholding enough elsewhere):

• Q1: April 15
• Q2: June 15
• Q3: September 15
• Q4: January 15

Use Form 1040-ES if you need to make quarterly payments.

Annually (Once a Year)

W-2 for your nanny: Due January 31

Schedule H (with your federal 1040): Due April 15

California DE 9C (annual reconciliation): Due January 31

Federal Form 940 (FUTA): Due January 31 (but you can file it with Schedule H instead and skip this)

Pro tip: Most household employers just file Schedule H with their personal tax return in April rather than making quarterly payments. You can do this as long as you either (1) increase your own income tax withholding to cover the nanny tax liability, or (2) pay any underpayment penalty (usually small).

How to Register as a Household Employer in California

Here's what you need to do to get set up:

Step 1: Get a Federal Employer Identification Number (EIN)

You need an EIN to report payroll taxes. Good news: it's free and takes about 5 minutes to get online through the IRS website.

See our guide on how to get an EIN for step-by-step instructions.

Step 2: Register with California EDD

Once you have your EIN, register with the California Employment Development Department:

• Go to edd.ca.gov
• Select "Register as a New Employer"
• Choose "Household Employer" as your business type
• Provide your EIN, SSN, and basic info

You'll receive your SUI account number within a few weeks.

Step 3: Get Workers' Compensation Insurance

California requires household employers to carry workers' compensation insurance if they pay $750 or more in any 90-day period. If you're employing a nanny regularly, you almost certainly need this.

You can get a household workers' comp policy through companies like State Fund or private insurers. Expect to pay around $500-1,000/year depending on wages.

Step 4: Give Your Nanny Tax Forms to Fill Out

Have your nanny complete:

• Form W-4: Federal income tax withholding (optional, but recommended)
• Form DE 4: California income tax withholding (required)
• Form I-9: Verify their identity and work authorization (required within 3 days of hiring)

Keep these forms in your records—you'll need them when you process payroll.

Do I Really Need to Do All This?

Yes. California is aggressive about enforcing household employment laws, and the penalties for not paying add up fast:

• Back taxes: Everything you should have paid, with interest
• Penalties: Up to 100% of the unpaid taxes for willful failure to pay
• Audit risk: The IRS and EDD actively look for unreported household employees

If you've been paying your nanny under the table and want to get compliant, you can usually file back taxes and limit the penalties. The sooner you start, the better.

How NannyKeeper Can Help

Here's the thing: doing all of this manually is a pain. You're tracking wages, calculating withholding rates, filing quarterly reports with the EDD, generating W-2s, and filling out Schedule H—all while trying to, you know, raise your kids.

NannyKeeper handles all of it for $10/month:

• Automatic payroll calculation (federal + California taxes)
• Quarterly EDD filings (DE 9, DE 9C)
• W-2 generation and filing
• Schedule H prep for your tax return
• Direct deposit to your nanny's bank account

We calculate everything, prep the forms, and tell you exactly what to pay and when. You just review and submit. No tax degree required.

Sign up free and see how it works—your first payroll calculation is on us.

Common California Nanny Tax Questions

Do I need to pay for my nanny's health insurance?

No. Unlike larger employers, household employers are not required to provide health insurance under the Affordable Care Act or California law. Some families choose to offer it as a benefit, but it's optional.

What if my nanny only works part-time?

The tax rules are the same whether your nanny works 10 hours/week or 40 hours/week. If you pay $2,700 or more per year (or $1,000+ in a quarter for California SUI), you owe taxes.

Can I classify my nanny as an independent contractor?

Almost certainly not. The IRS and California have strict rules about who counts as an employee vs. a contractor. If you control what work is done and how it's done (which you do with a nanny), they're an employee. Misclassifying can lead to huge penalties.

Read more: Nanny vs. Contractor

What if I pay my nanny in cash?

Paying in cash is fine—but you still owe taxes. "Cash under the table" (i.e., not reporting it) is tax evasion, and it's a bad idea. Use direct deposit instead—it's easier, creates a paper trail, and keeps you compliant.

Learn how to set up direct deposit for your nanny

Do I owe taxes if my nanny is a family member?

Usually, yes. The only exceptions:

• Your spouse
• Your child under age 21
• Your parent (unless your child lives with you and is under 18 or has a disability)

If your nanny is your sibling, cousin, or adult child, you owe taxes just like any other household employer.

The Bottom Line

California nanny taxes are more complex than federal-only taxes, but they're not unmanageable. You'll pay:

• ~10-12% in employer-side taxes (Social Security, Medicare, unemployment)
• Withhold ~8-12% from your nanny's paycheck (income tax, SDI, Social Security, Medicare)

For a nanny earning $3,000/month, expect to pay around $300-350/month in total taxes (employer share + employee withholding). That might sound like a lot, but it's the cost of being a legal household employer—and it's way cheaper than the penalties for not paying.

Next steps:

1. Get your EIN (5 minutes, free)
2. Register with California EDD
3. Get workers' comp insurance
4. Start running payroll (or let NannyKeeper do it for you)

You've got this. And if you want help, we're here.

Start your free trial →

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Related guides:

• The Complete Guide to Nanny Taxes
• Nanny Tax Calculator 2026
• When Do Nanny Taxes Apply?
• Schedule H: A Friendly Guide for Household Employers

California vs. Other States: What Makes CA Different?

If you've hired a nanny in another state before, here's what's unique about California:

State Disability Insurance: Most states don't have this. California, New York, New Jersey, Rhode Island, and Hawaii do. It's employee-paid (you just withhold it), but it's an extra line item you need to track.

Employment Training Tax: This tiny 0.1% tax is California-specific. You won't find it in most other states.

Workers' Compensation Requirement: California requires workers' comp if you pay $750+ in a 90-day period. Many states don't require it for household employers at all, or have higher thresholds.

Income Tax Withholding: California requires it (unlike federal, where it's optional unless requested). You need to calculate it using California's withholding tables, which are different from the federal ones.

Aggressive Enforcement: California's EDD is known for actively pursuing unreported household employment. If your nanny ever files for unemployment or disability, the state will find out you didn't pay taxes—and they will come after you for back taxes and penalties.

Real-World Example: What You'll Actually Pay

Let's say you hire a nanny in California who works 40 hours/week at $20/hour. Here's what the taxes look like:

Gross wages: $3,467/month ($20/hour × 173.33 hours)

Employer taxes you pay:

• Social Security (6.2%): $215
• Medicare (1.45%): $50
• FUTA (0.6% on first $7,000/year): ~$4/month average
• SUI (3.4% on first $7,000/year): ~$20/month average
• ETT (0.1% on first $7,000/year): ~$0.60/month average
• Total employer taxes: ~$290/month

Employee taxes you withhold:

• Social Security (6.2%): $215
• Medicare (1.45%): $50
• SDI/PFL (1.1%): $38
• California income tax (depends on allowances, estimate ~4%): $139
• Federal income tax (depends on W-4, estimate ~10%): $347
• Total withheld: ~$789/month

Your nanny's take-home: $2,678/month ($3,467 gross - $789 withheld)

Your total cost: $3,757/month ($3,467 wages + $290 employer taxes)

Bottom line: Budget about 8-10% on top of your nanny's gross wages for the taxes you pay as the employer.

What Happens If You Get Audited?

The IRS and California EDD can audit household employers, and they do. Here's what triggers an audit:

• Your nanny files for unemployment: The state will ask about their previous employer—that's you.
• Your nanny gets injured and files a workers' comp claim: If you don't have coverage, the state finds out.
• Your nanny reports you: If you have a dispute or they file their own taxes and report wages from an employer (you) who didn't file payroll taxes, red flags go up.
• Random selection: The EDD does random audits of new employer registrations.

If you get audited and haven't been paying taxes, expect:

• Back taxes owed: Everything you should have paid, going back up to 3 years (or more if they find fraud).
• Interest: Accrues from the date the taxes were originally due.
• Penalties:
  • Failure to file: 5% per month, up to 25% of unpaid taxes
  • Failure to pay: 0.5% per month, up to 25%
  • Fraud or willful failure: Up to 100% of unpaid taxes

For a nanny earning $40,000/year, three years of back taxes could easily cost you $15,000-20,000 in taxes, penalties, and interest.

Don't risk it. Getting compliant now is way cheaper than dealing with an audit later.

Tips for Staying Compliant (and Sane)

1. Keep Good Records

Save everything:

• Payroll records (hours worked, gross pay, withholdings)
• Copies of checks or direct deposit confirmations
• Tax forms (W-2, W-4, DE 4, Schedule H)
• EDD quarterly filings
• Workers' comp policy

California requires you to keep payroll records for at least 4 years. Digital copies are fine—just make sure they're backed up.

2. Pay Electronically When Possible

Direct deposit for your nanny, electronic payments to the EDD and IRS. It creates a paper trail, reduces errors, and makes your life easier.

3. Set Aside Money for Taxes

Every paycheck, set aside about 10% of your nanny's gross wages in a separate account. This covers your employer-side taxes and ensures you have the cash when quarterly or annual deadlines hit.

4. Use Payroll Software (or Let NannyKeeper Handle It)

Doing this manually is tedious and error-prone. Even if you're good at math, tracking changing tax rates, filing deadlines, and form updates is a part-time job.

NannyKeeper automates all of it for $10/month—less than the cost of one hour of childcare. We calculate, file, and remind you about deadlines so you never miss anything.

5. Don't Panic If You're Behind

If you've been paying your nanny off the books and want to get compliant, you can file back taxes. The IRS and EDD would rather get paid late than chase you forever.

Start by:

1. Calculating what you owe (use NannyKeeper or a CPA)
2. Filing back payroll tax returns
3. Paying what you owe (payment plans are available)
4. Getting current going forward

The penalties are lower if you come forward voluntarily rather than waiting for an audit.

Final Thoughts

California nanny taxes are more involved than most states, but they're not impossible. Thousands of families do this every year—and once you're set up, it's just a routine part of running payroll.

The key things to remember:

• If you pay your nanny $2,700+ per year, you owe federal and California taxes.
• You'll pay about 10% on top of wages for employer-side taxes.
• You'll withhold about 20-25% from your nanny's paycheck for their taxes.
• Deadlines are quarterly for California, annual for federal (unless you make estimated payments).
• Workers' comp insurance is required if you pay $750+ in 90 days.
• Getting caught paying under the table is way more expensive than just doing it right.

If you want to handle this yourself, go for it—just stay organized and don't miss deadlines. If you'd rather not think about it, NannyKeeper does the heavy lifting for $10/month.

Either way, you've got this.

Get started with NannyKeeper →

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Have questions? Email us at support@nannykeeper.com or check out our complete nanny tax guide for more details.