Nanny Taxes 2026: The Complete Guide for Household Employers

So you hired a nanny. Congratulations—that's a big step! But now you're hearing about something called "nanny taxes" and wondering what you've gotten yourself into.

Don't worry. You're not alone, and it's not as scary as it sounds. Thousands of families figure this out every year, and you will too.

This guide breaks it all down in plain English.

Short on time? Check out our nanny taxes quick reference for a summary with tax rates and calculator.

What Are Nanny Taxes?

TL;DR: Nanny taxes are the Social Security, Medicare, and unemployment taxes you pay when you hire someone to work in your home. You pay about 7.65% on top of their wages, plus you withhold 7.65% from their paycheck.

"Nanny taxes" is just the nickname for the employment taxes you pay when you hire someone to work in your home. It's the same concept as when your employer withholds taxes from your paycheck—except now you're the employer.

Here's what's included:

• Social Security: 6.2% from you + 6.2% from your nanny's wages
• Medicare: 1.45% from you + 1.45% from your nanny's wages
• Federal Unemployment (FUTA): 6% on the first $7,000 of wages (usually reduced to 0.6% after state credits)
• State Unemployment (SUTA): Varies by state—check your state's requirements

Wondering what this actually costs? Try our free nanny tax calculator to see the numbers for your situation.

When Do These Taxes Kick In?

You don't owe nanny taxes on every dollar from day one. The IRS sets an annual threshold per employee:

• 2025: $2,800
• 2026: $3,000

Here's what that means in practice:

Once you cross that threshold with any single employee, you need to start withholding and paying employment taxes.

Am I Really a "Household Employer"?

If you're thinking "but I'm just a parent, not a business"—we get it. But in the eyes of the IRS, if you:

1. Hire someone to work in your home
2. Control what they do and how they do it
3. Pay them above the annual threshold ($2,800 for 2025, $3,000 for 2026)

...then yes, you're a household employer. Welcome to the club.

According to IRS Publication 926, "You have a household employee if you hired someone to do household work and that worker is your employee. The worker is your employee if you can control not only what work is done, but how it is done."

This applies to nannies, housekeepers, senior caregivers, private nurses, and personal drivers. It doesn't apply if you hire through an agency that handles payroll—in that case, the agency is the employer.

Hiring a live-in nanny? The tax rules are different — room and board, overtime, and FICA all work differently. See our live-in nanny tax guide.

Not sure if your worker counts as an employee? Read our guide on employee vs. contractor classification. (Spoiler: nannies are almost always employees.)

Ready to handle payroll? Check out our household employer payroll services to see how NannyKeeper makes it easy.

The 5 Things You Need to Do

Want the visual version? See our step-by-step how it works guide for a quick overview.

1. Get an EIN

An Employer Identification Number is like a Social Security number for your role as an employer. It's free, takes 5 minutes, and you can do it online at irs.gov.

2. Have Your Nanny Fill Out Paperwork

Before their first paycheck, they should complete:

• Form W-4: Tells you how much federal income tax to withhold (if any)
• Form I-9: Verifies they're authorized to work in the US

3. Withhold Taxes from Each Paycheck

Every time you pay your nanny, you'll set aside:

• 6.2% for Social Security (their share)
• 1.45% for Medicare (their share)
• Federal/state income tax (if they requested it on their W-4)

You'll also owe your own 6.2% + 1.45% as the employer—but that comes from your pocket, not theirs.

Want to know exactly how much you'll owe? See our employer tax breakdown →

4. Pay Quarterly Taxes

Four times a year, you'll send in:

• Everything you withheld from your nanny
• Your employer share of Social Security and Medicare
• Federal and state unemployment taxes

The deadlines are April 15, June 15, September 15, and January 15.

Worried about missing a deadline? NannyKeeper calculates what you owe each quarter and emails you a reminder before the due date — so you never have to track it yourself.

5. File Year-End Forms

By January 31, give your nanny a W-2 showing what they earned and what was withheld.

When you file your own taxes, attach Schedule H to report your household employment taxes.

New for 2025-2028: Your nanny may be able to deduct overtime pay from their federal income tax under the OBBBA. Learn about the overtime deduction →

Common Mistakes (and How to Avoid Them)

Paying "under the table" It feels easier, but it puts both of you at risk. Your nanny loses Social Security credits and unemployment protection. You face back taxes, penalties, and interest if caught.

Missing the threshold Track payments carefully. It's easy to cross the annual threshold without realizing it—$3,000 (the 2026 threshold) is just $58/week.

Forgetting about your state Federal taxes are just part of the picture. Most states have their own unemployment insurance, and some require disability insurance or paid family leave. Find your state's requirements →

Skipping quarterly payments If you wait until April to pay a whole year's worth of taxes, you'll owe penalties. Pay as you go.

How NannyKeeper Makes This Easy

We built NannyKeeper because we went through this ourselves. As parents who employ nannies, we know how confusing this can be — and how much you'd rather spend that time with your family.

Here's what NannyKeeper does for you:

• Calculates every paycheck — Federal, state, and local taxes for all 50 states, automatically
• Tracks your threshold — We'll tell you when you're approaching the $3,000 limit
• Sends quarterly reminders — Never miss an April 15, June 15, September 15, or January 15 deadline
• Generates W-2s and Schedule H — Ready for you to file (including the new Box 12 code TT for overtime)
• Creates pay stubs — Professional records for you and your nanny
• Handles direct deposit — Pay your nanny without writing checks

You handle the filing (it's simpler than you think), and we handle the math.

Pricing: Free payment tracking forever. Full payroll starts at $10/mo — no year-end fees, no surprises. See plans →

Try NannyKeeper free →

FAQ

How much do nanny taxes cost?

Your employer share is about 7.65% of wages (6.2% Social Security + 1.45% Medicare), plus federal and state unemployment taxes. On a $40,000 salary, expect to pay roughly $3,500-$4,500 in employer taxes depending on your state. A payroll service like NannyKeeper adds $10-$18/mo. Use our free calculator to see exact numbers for your situation.

When do I start paying nanny taxes?

You owe nanny taxes once you pay a single household employee $3,000 or more in a calendar year (2026 threshold). Once you cross that threshold, taxes apply to the full year's wages—not just the amount over $3,000.

What happens if I don't pay nanny taxes?

The IRS can charge penalties for late filing (5% per month, up to 25%) and late payment (0.5% per month), plus interest. Your employee also loses Social Security credits and unemployment protection. Learn more in our guide on catching up on back nanny taxes.

Do I need to pay quarterly or can I wait until April?

You can either pay quarterly estimated taxes or increase your own W-4 withholding at your job to cover the liability. If you wait until April to pay a full year's worth, you may owe underpayment penalties.

Is my nanny an employee or independent contractor?

Almost always an employee. The IRS says if you control what work is done and how it's done, the worker is your employee. See our guide on employee vs. contractor classification for details.

Try NannyKeeper free →