Your nanny's anniversary is coming up—or maybe your state just raised its minimum wage—and you're wondering: how much of a raise is fair?
The short answer: 3–5% per year is standard. But the right number depends on your market, your nanny's experience, and how much the job has changed since you set the original rate.
When to Give a Raise
Annual review
Most families revisit pay once a year—either on the nanny's work anniversary or January 1. Consistency matters more than the exact date. Pick one and stick with it.
Your state raised its minimum wage
30+ states have minimum wages above the federal $7.25, and many increase automatically each January. If your nanny's current rate is close to the new minimum, you'll need to adjust. Check your state's current rate.
Even if you're still above the new floor, a shrinking gap sends the wrong message. A nanny making $16/hour when minimum wage was $14 felt well-compensated. When minimum wage hits $15.50, that same $16 feels like an afterthought.
The job has changed
If your nanny's responsibilities have grown—a new baby, school-age tutoring, driving to activities, family laundry—the pay should reflect that. A bigger job deserves bigger pay.
You're below market
If you've been paying the same rate for two years and your neighbor just hired a nanny at $3/hour more, you're behind. Good nannies know their market value, and losing yours will cost far more than a raise.
How Much Is Typical
| Scenario | Typical Raise |
|---|---|
| Annual cost-of-living adjustment | 3–5% |
| Strong performance, 1+ year tenure | 5–7% |
| New child added to care | $1–3/hour |
| Significant new duties (housekeeping, driving) | $1–3/hour |
| Below-market correction | Whatever closes the gap |
| Minimum wage increase (already close) | At least to new minimum + buffer |
What 3–5% looks like in dollars
| Current Rate | 3% Raise | 5% Raise |
|---|---|---|
| $18/hour | $18.54 | $18.90 |
| $20/hour | $20.60 | $21.00 |
| $22/hour | $22.66 | $23.10 |
| $25/hour | $25.75 | $26.25 |
| $28/hour | $28.84 | $29.40 |
For a full-time nanny working 40 hours/week, every $1/hour adds $2,080/year before taxes.
What Affects the Amount
Experience and tenure
A nanny who's been with your family for three years, knows your routines, and your kids adore? That's worth more than a 3% bump.
Retention saves real money. Consider the cost of replacing them:
| Replacement Cost | Estimate |
|---|---|
| Agency placement fee | 10–15% of annual salary |
| Time interviewing | 10–20 hours |
| Transition period | 2–4 weeks |
| Children's adjustment | Stressful for everyone |
A $2/hour raise ($4,160/year) is almost always cheaper than starting over.
Cost of living in your area
If you're in California, New York, or Washington—where both housing and market nanny rates are high—raises need to keep pace. In lower-cost states, even a smaller dollar amount may feel generous.
See how your rate compares across the country with our nanny cost by state tool.
Number of children
Adding a child is the most common reason for a larger-than-usual raise:
| Change | Typical Increase |
|---|---|
| 1 → 2 children | $1–3/hour |
| 2 → 3 children | $2–4/hour |
| Infant added (any number) | Additional $1–2/hour |
Infants need more hands-on care, nap scheduling, and attention—it's a meaningfully harder job.
Added responsibilities
If you've gradually asked your nanny to take on tasks beyond the original deal—grocery shopping, pet care, family laundry—the pay should catch up. Formalize the new duties with a raise and an updated contract.
How to Calculate Your New Cost
A raise affects more than the hourly rate. Your employer taxes increase proportionally.
Example: $20/hour → $21/hour (5% raise), full-time
| Cost Component | Before | After | Difference |
|---|---|---|---|
| Annual wages (40 hrs/week) | $41,600 | $43,680 | +$2,080 |
| Social Security (6.2%) | $2,579 | $2,708 | +$129 |
| Medicare (1.45%) | $603 | $633 | +$30 |
| FUTA (0.6% on $7,000) | $42 | $42 | $0 |
| Total employer cost | $44,824 | $47,063 | +$2,239 |
The employer tax increase is about $159/year for every $1/hour raise. Not as scary as it sounds.
Use our calculator to see your exact numbers →
How to Have the Conversation
You don't need a formal performance review. A simple, direct conversation works best.
What to say:
"You've been with us for a year now, and we really value what you do for our family. We'd like to increase your rate from $20 to $21 per hour, starting [date]. Does that sound good?"
Tips:
- Be specific. Name the new rate and start date—don't make them ask.
- Acknowledge their work. A sentence or two about what you appreciate goes a long way.
- Don't apologize for the amount. If 3–5% is what makes sense, that's fair. Most nannies understand.
- Be open to discussion. If they were expecting more, listen. They may have good reasons.
What not to do:
- Don't wait until they ask (or threaten to leave)
- Don't give a raise only as a reaction to a competing offer—be proactive
- Don't skip the raise because "they seem happy"
Update Your Agreement
Once you agree on the new rate, put it in writing. You can:
- Draft a simple amendment — "Effective [date], hourly rate changes from $X to $Y. All other terms remain the same." Both parties sign.
- Create a new agreement — Our free contract builder generates a complete contract with the new rate, reflecting your state's current requirements.
Either way, keep a copy. An updated agreement protects both of you if there's ever a question about compensation.
For everything that should be in a nanny contract—including the sections most templates miss—see our contract essentials guide.
Tax Impact of a Raise
A raise changes your per-paycheck withholding, but the process is the same:
- FICA (Social Security + Medicare): 7.65% each for employer and employee. Scales automatically with the new rate.
- Federal and state income tax: Withholding adjusts based on the nanny's W-4. No action needed from you.
- Unemployment taxes (FUTA/SUTA): Capped at the wage base per employee, so these rarely change with a raise.
If your nanny hasn't updated their W-4 recently, a raise is a natural time to ask. Life changes—marriage, new child, second job—affect withholding.
NannyKeeper recalculates all taxes automatically when you update the hourly rate. See how it works →
See what you'll owe
Use our free calculator to estimate your nanny tax costs for 2026.
FAQ
How often should I give my nanny a raise?
Once a year is standard—either on their work anniversary or January 1. If your state raises its minimum wage mid-year and your nanny's rate is near the new floor, adjust then instead of waiting.
What if I can't afford a raise right now?
Be honest. Most nannies prefer transparency over silence. You might say, "We can't do a raise right now, but we'd like to revisit in six months." In the meantime, consider non-monetary perks like extra PTO, a flexible sick day policy, or a year-end bonus.
Should I give a raise when I add another child?
Yes. An additional child—especially an infant—means significantly more work. $1–3/hour more is typical. It's also the right time to update the employment agreement with revised duties.
Is it normal for a nanny to ask for a raise?
Absolutely. A nanny who advocates for themselves is being professional. If the request is reasonable and within your budget, say yes. If not, have an honest conversation about what you can offer and when you might revisit.
Do I need to adjust my tax payments after a raise?
Your per-paycheck withholding adjusts automatically with the new rate. If you make quarterly estimated tax payments, the amounts will increase slightly—check your updated numbers →.
What if my nanny's rate is already above market?
You're not required to give a raise, but a small cost-of-living adjustment (2–3%) shows good faith. You can also offer non-monetary benefits like additional paid time off or a holiday bonus.