Nanny taxes are calculated from three federal rates and one state rate that apply once you pay any single household employee $3,000 or more in a calendar year. The federal math: 7.65% FICA (Social Security + Medicare), 0.6% FUTA on the first $7,000 of wages, and your state's unemployment insurance rate (typically 1–5%). At $40,000 in annual wages, that comes out to about $3,277 in total employer taxes — roughly 8% on top of what you pay your nanny.
Methodology. Rates verified on May 26, 2026 against IRS Publication 926 (current revision) and the IRS Schedule H instructions. State unemployment rates and wage bases are set annually by each state's labor department; figures here use typical new-employer rates. Reviewed by the NannyKeeper team, a household-payroll compliance platform that calculates federal and state nanny tax for paying employers across all 50 states. If your specific situation involves an alternate SUTA experience rate or a state disability/family-leave contribution, the state agency's published figure governs.
The Basic Math: 7.65% + 0.6% + State
The federal portion of nanny tax is fixed and the same in every state. Per IRS Publication 926:
"If you have a household employee, you may need to withhold and pay social security and Medicare taxes, pay federal unemployment tax, or both."
Three federal rates apply on top of wages once you've paid a single household employee $3,000 or more in a calendar year (the 2026 FICA threshold, unchanged from 2025):
| Tax | Employer rate | Notes |
|---|---|---|
| Social Security | 6.2% | On wages up to the Social Security wage base ($184,500 in 2026); employee pays the same |
| Medicare | 1.45% | No wage cap; employee pays the same |
| FUTA | 0.6% | On the first $7,000 of wages per employee per year; employer-only |
Per the Social Security Administration:
"In 2026, the maximum amount of earnings on which you must pay Social Security tax is $184,500."
State unemployment insurance (SUTA) layers on top. SUTA rates and wage bases are set by each state's labor department and vary by employer experience rating. For new household employers, the typical rate is 2–5% on a wage base anywhere from $7,000 (matching FUTA) up to $52,700 (Washington). The U.S. Department of Labor FUTA credit reduction page explains how federal and state unemployment interact.
What You Owe at $40,000 in Wages
The cleanest way to see the math is to plug in a single full-year wage and walk every line:
| Tax | Rate | Annual Cost |
|---|---|---|
| Social Security (employer) | 6.2% | $2,480 |
| Medicare (employer) | 1.45% | $580 |
| FUTA (federal unemployment) | 0.6% on first $7,000 | $42 |
| SUTA (state unemployment, est.) | ~2.5% on $7,000 base | ~$175 |
| Total Employer Taxes | ~$3,277 |
That works out to approximately 8% on top of wages. The Social Security and Medicare halves are mirrored on the employee side: you withhold another 7.65% from each paycheck. The federal income-tax withholding line is optional unless your nanny submits a W-4 requesting it.
What Gets Withheld from Your Nanny's Paycheck
In addition to the employer taxes above, you withhold from each paycheck:
| Tax | Rate | Annual Amount (at $40K) |
|---|---|---|
| Social Security | 6.2% | $2,480 |
| Medicare | 1.45% | $580 |
| Federal income tax | Per W-4 | Depends on filing status |
| State income tax | Varies | Depends on state |
The FICA withholding (7.65%) is mandatory once the $3,000 threshold is crossed. Federal income tax withholding is optional for household employees unless your nanny submits a Form W-4 requesting it — and many do, because it consolidates their tax bill into payroll instead of leaving them with an April surprise.
Real Dollar Examples at Three Wage Levels
Plugging the same federal rates into three realistic wage scenarios shows how the math scales:
Part-Time Nanny: $20,000/year
| Your Employer Costs | Amount |
|---|---|
| Social Security (6.2%) | $1,240 |
| Medicare (1.45%) | $290 |
| FUTA (0.6% on first $7,000) | $42 |
| SUTA (est. 2.5% on $7,000) | $175 |
| Total | ~$1,747 |
That's about $146/month in employer taxes on top of the $1,667/month wage.
Full-Time Nanny: $50,000/year
| Your Employer Costs | Amount |
|---|---|
| Social Security (6.2%) | $3,100 |
| Medicare (1.45%) | $725 |
| FUTA (0.6% on first $7,000) | $42 |
| SUTA (est. 2.5% on $7,000) | $175 |
| Total | ~$4,042 |
That's about $337/month in employer taxes on top of the $4,167/month wage.
Two Nannies, $70,000/year Combined
| Your Employer Costs | Amount |
|---|---|
| Social Security (6.2%) | $4,340 |
| Medicare (1.45%) | $1,015 |
| FUTA (0.6% × 2 employees, on first $7,000 each) | $84 |
| SUTA (est. 2.5% on $7,000 × 2) | $350 |
| Total | ~$5,789 |
Each additional employee resets the FUTA and SUTA wage bases, so two employees splitting $70K cost more in unemployment tax than one employee earning $70K.
State Taxes Are Where Households Get Surprised
The federal math is the same in every state. State rules layer differences on top — sometimes a lot of them.
Higher-tax states with required employee contributions:
- California: State Disability Insurance (SDI) at 1.1% on all wages, plus Paid Family Leave funded by SDI. Per the California Employment Development Department, the 2026 SDI rate is 1.1% with no wage cap.
- New York: Mandatory disability benefits law (DBL) coverage plus Paid Family Leave (PFL) contribution.
- New Jersey: Multiple employee contributions including unemployment, disability, and family leave.
Lower-burden states (no state income tax):
- Texas, Florida, Tennessee: No state income tax; SUTA only.
- Washington: No state income tax, but employers contribute to Paid Family and Medical Leave (PFML).
Find your state's specific requirements →
When Do You Pay Nanny Taxes?
Household-employer payroll taxes are paid annually with your personal Form 1040 via Schedule H, not quarterly the way business payroll works. But because Schedule H taxes are added to your overall tax bill, the IRS expects you to either increase withholding at your day job (via a fresh W-4) or make quarterly estimated tax payments using Form 1040-ES.
| Quarter | Estimated Payment Deadline |
|---|---|
| Q1 (Jan–Mar) | April 15 |
| Q2 (Apr–Jun) | June 15 |
| Q3 (Jul–Sep) | September 15 |
| Q4 (Oct–Dec) | January 15 (of the following year) |
State unemployment (SUTA) is the exception: most states require quarterly returns and payments to the state labor department, separate from the federal Schedule H process.
Why the Math Matters: Deductions and Credits
Nanny taxes are not pure overhead. The federal portion is offset by two tax breaks:
Dependent Care FSA. If your employer offers one, you can set aside up to $5,000 pre-tax to pay qualifying childcare expenses, including nanny wages. The IRS confirms the $5,000 limit at IRS Publication 503.
Child and Dependent Care Credit (CDCTC). Without an FSA, you can claim a credit on Form 2441 for a portion of nanny wages spent on care for children under 13. The credit ranges from 20% to 50% of qualifying expenses depending on income, with a $3,000 expense cap for one child and $6,000 for two or more.
These offsets often recover $1,000–$2,000 of the federal nanny tax bill for a typical household.
Use the Calculator to Get Your Number
The math in this article generalizes. Your actual nanny tax bill depends on your state, your specific SUTA rate, and any state disability or family-leave contributions that apply. Our free nanny tax calculator plugs in your state and wages and gives you the exact employer + employee figures in about 30 seconds, no signup required.
See what you'll owe
Use our free calculator to estimate your nanny tax costs for 2026.
FAQ
What's the minimum I have to pay a nanny before nanny taxes apply?
$3,000 per employee per calendar year for FICA (Social Security and Medicare). Once you cross that threshold with a single household employee, all wages paid to that employee become subject to FICA — including wages paid before you hit the threshold. FUTA kicks in at $1,000 of household wages in any quarter. State SUTA thresholds vary; California, DC, and New York are the lowest at $500–$750 per quarter.
Do I have to withhold federal income tax from my nanny's paycheck?
Only if your nanny submits a W-4 asking you to. Federal income tax withholding is optional for household employees, unlike FICA. Most nannies do request it because it consolidates their tax bill into payroll rather than leaving a balance due in April.
Is the nanny tax math the same in every state?
The federal portion (FICA, FUTA) is the same nationwide. State unemployment (SUTA), state income tax, and any state disability or family-leave contributions vary by state. The biggest state-specific deltas come from California (SDI), New York (DBL + PFL), and Washington (PFML).
What if my nanny is a contractor instead of an employee?
Household workers performing services in your home under your direction are employees under IRS rules, not contractors, regardless of what either of you prefers. See our W-2 vs 1099 explainer for the IRS test and why misclassification gets families audited.
Can I just pay my nanny in cash?
You can pay any way you like — cash, check, Zelle, Venmo. The payment method doesn't change the tax obligation. See paying your nanny in cash for the compliance walk-through.