To withhold taxes from your nanny's pay, you take out the employee's half of Social Security and Medicare from each paycheck once your nanny is on track to earn $3,000 or more from you in 2026, plus federal and state income tax only where they apply. You keep the withheld money and pay it to the IRS later with your own share. This guide covers what comes out, what never does, and how to fix it if you missed a paycheck.
What comes out of your nanny's paycheck
Two federal amounts come out of your nanny's gross pay once Social Security and Medicare apply: 6.2% for Social Security, on wages up to $184,500 in 2026, and 1.45% for Medicare, with no wage cap. Together that is 7.65% of each paycheck. These are your nanny's own taxes. You collect them and pay them in for your nanny.
Once you pay a household employee $3,000 or more in cash wages in 2026, Social Security and Medicare apply to everything you paid that employee that year, starting from the first dollar. That is why the threshold matters for every paycheck, not only the ones after you cross it.
Everything else on a paycheck depends on choices and on your state:
| What | Withheld from your nanny? | Who decides |
|---|---|---|
| Social Security and Medicare (employee share) | Yes, once the $3,000 test is met | Federal law |
| Federal income tax | Only if your nanny asks and you agree | You and your nanny, on Form W-4 |
| State income tax | Depends on the state | Your state |
| State disability or paid family leave | Where your state has a program that takes an employee share | Your state |
| Additional Medicare Tax | Only on wages above $200,000 | Federal law |
| Federal unemployment tax | Never | You pay it yourself |
| State unemployment tax | Only in Alaska, New Jersey and Pennsylvania (a small employee share) | Your state |
Additional Medicare Tax: withhold 0.9% on any wages above $200,000 you pay one employee in the year. There is no employer share. Very few nannies reach it, but it belongs on the list.
What never comes out of the paycheck
Federal unemployment tax (FUTA) is never withheld. You pay it yourself. The same goes for your matching 7.65% of Social Security and Medicare, and for state unemployment tax everywhere except Alaska, New Jersey and Pennsylvania, which take a small employee share from the paycheck. Those are your costs as the employer, and they sit on top of your nanny's pay.
It's a mix-up we see in support: a family reads a total "nanny tax" figure and takes all of it out of the paycheck. Only the employee's share (and any income tax your nanny asked for) comes out. Your share is extra. Our nanny employer taxes guide breaks down the full employer side with a worked example.
What if your nanny may not reach $3,000?
You can withhold from the first paycheck anyway. If you withhold and your nanny ends the year under $3,000, the IRS says you should repay it. Withholding early is the safer choice when you are not sure, because the $3,000 test is all or nothing: cross it in December and Social Security and Medicare apply to the whole year.
NannyKeeper works this way on purpose. We calculate the employee's share on every paycheck and show it as held until your nanny crosses the threshold. If the year ends under $3,000, you pay that money back to your nanny.
Federal income tax is optional
Federal income tax is optional. The IRS says you withhold it only if your nanny asks and you agree, using a completed Form W-4.
"You're not required to withhold federal income tax from wages you pay a household employee."
IRS Publication 926 (2026), Do You Need To Withhold Federal Income Tax?
If you don't withhold it, your nanny still owes the tax and pays it on their own return, usually through estimated payments.
In NannyKeeper, federal income tax withholding is on by default, calculated from your nanny's W-4. If your nanny would rather pay the IRS directly, open your nanny's profile, choose Edit, and turn it off in the Tax Withholding section. It stops from the next paycheck on. It never changes past paychecks, and it doesn't change Social Security, Medicare or unemployment tax. It only changes when your nanny pays the income tax, not how much is owed.
If your nanny's withholding looks higher than with a previous payroll provider, check the W-4 first. The box in Step 2 for a second job or a working spouse, or other income entered on the form, raises withholding a lot. The fix is a new W-4, not a change to the payroll.
State income tax withholding
State rules vary more than federal ones. Several states follow the federal approach and don't require income tax withholding for household workers. Arizona goes further and doesn't allow it: wages for domestic service in a private home are excluded from Arizona withholding, and the employer can't elect it. Other states require income tax withholding from household workers, based on the state's own withholding form. Your state's page in our state guides says which rule applies where you live.
If your state has its own withholding form, your nanny fills it out separately from the federal W-4. Until you have it, NannyKeeper estimates state income tax from the federal W-4 so paychecks don't start at zero.
Paying your nanny's share yourself
You can also pay your nanny's share yourself instead of withholding it. If you do, the amount you pay counts as extra wages for income tax. It shows up on your nanny's W-2 as wages, alongside the Social Security and Medicare tax you paid. Our W-2 guide for household employees covers where each amount goes.
Families usually choose this when they promised a take-home number and don't want the paycheck to shrink. It works, but it costs you the 7.65% plus your own matching share, and the extra wages can raise your nanny's income tax a little.
If you withheld too little, or not at all
If you withheld too little, the IRS says to withhold the difference from a later paycheck. If you never withheld at all, you are generally liable for your nanny's share as well as your own. You can't skip it because it was supposed to come from the paycheck.
For a short gap earlier this year, you can withhold the difference from your nanny's next few paychecks. For months of unwithheld pay, our guide to paying back nanny taxes walks through the options, including paying the employee's share yourself.
Where the withheld money goes
You keep the money you withheld until you pay it to the IRS. You generally report the withheld amounts, plus your own share, on Schedule H with your federal return. For 2026 wages that return is due April 15, 2027, and you can pay along the way through estimated tax payments or extra withholding from your own paycheck.
NannyKeeper calculates every amount, tracks what you have withheld, and prepares the W-2 and Schedule H figures. You make the payments and file the forms yourself.
A paycheck, worked through
Say you pay your nanny $800 a week and your nanny chose not to have federal income tax withheld:
- Gross pay: $800.00
- Social Security withheld (6.2%): $49.60
- Medicare withheld (1.45%): $11.60
- Take-home pay: $738.80
You also owe your own $49.60 and $11.60 for that week, plus unemployment tax. Those come out of your pocket, not the paycheck. You can run your own numbers in the nanny tax calculator.
See what you'll owe
Use our free calculator to estimate your nanny tax costs for 2026.
FAQ
Do I have to withhold taxes from my nanny's pay?
You must withhold the employee's share of Social Security and Medicare once you pay your nanny $3,000 or more in cash wages in 2026, or pay that share yourself. Federal income tax withholding is optional and happens only if your nanny asks and you agree.
How much do I withhold from my nanny's paycheck?
For Social Security and Medicare, 7.65% of gross pay (6.2% plus 1.45%). Federal and state income tax depend on your nanny's W-4, your nanny's state form and your state's rules, and some states also take disability, paid leave or unemployment contributions from the paycheck.
Do I withhold anything below $3,000?
You don't have to, but you may. If you withhold and the year ends under $3,000, you repay your nanny. Withholding from the start avoids a large catch-up if your nanny crosses the threshold late in the year.
Is the withheld money an extra cost for me?
No. It comes out of your nanny's gross pay and it is your nanny's tax. Your extra costs are your matching Social Security and Medicare and the unemployment taxes.
Does NannyKeeper send the withheld taxes to the IRS for me?
No. NannyKeeper calculates and tracks every amount and prepares your W-2 and Schedule H figures. You pay the IRS and your state yourself, and you file the forms.
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