Texas Nanny Tax Guide for 2026: Simpler Than You Think

Good news for Texas families: employing a nanny in the Lone Star State is simpler than almost anywhere else in the country. No state income tax means less paperwork, fewer forms, and one less thing to worry about. But you still owe federal taxes, and there are a few Texas-specific requirements to know about.

Here's everything you need to handle nanny taxes in Texas—without the headache.

Quick Overview: What Texas Families Owe

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

Federal taxes:

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

Texas state taxes:

• None! Texas has no state income tax
• But: You still owe unemployment insurance (TWC)

That's it. No state income tax withholding, no disability insurance, no extra payroll forms. Just federal taxes plus Texas unemployment.

When Do Nanny Taxes Apply in Texas?

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 federal nanny taxes apply.

For Texas unemployment insurance, you owe if you pay $1,000 or more in any calendar quarter.

Translation: If you're paying a nanny regularly—even part-time—you almost certainly owe taxes. A nanny earning just $225/week hits the federal threshold in 12 weeks.

Breaking Down Texas Nanny Taxes

Federal Taxes (Same for All States)

1. Social Security & Medicare (FICA)

• Social Security: 6.2% employer + 6.2% employee = 12.4% total
• Medicare: 1.45% employer + 1.45% employee = 2.9% total

You pay half, your nanny pays half (you withhold their share from paychecks).

Example: If your nanny earns $3,000/month:

• You pay: $229.50 (6.2% + 1.45% = 7.65% of $3,000)
• You withhold from nanny: $229.50

2. Federal Unemployment Tax (FUTA)

• Rate: 6% on the first $7,000 in wages per year
• Credit: You get a 5.4% credit if you pay state unemployment on time
• Effective rate: 0.6% = $42 per year max

3. Federal Income Tax Withholding (Optional)

You're only required to withhold federal income tax if your nanny requests it by filling out Form W-4. If they don't ask, you don't have to.

Most nannies do request withholding to avoid a big tax bill in April. Use the IRS withholding tables or the IRS Tax Withholding Estimator to calculate the amount.

Texas-Specific: Unemployment Insurance

Texas Workforce Commission (TWC) Unemployment Tax

• Who pays: You (the employer)
• Rate: New employers pay 0.59% on the first $9,000 in wages per employee
• Max cost: $53.10 per year for a new employer

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

How it works:
If your nanny earns $40,000/year, you only pay unemployment tax on the first $9,000 = $53.10/year.

That's it. No other Texas-specific payroll taxes.

What You Won't Pay in Texas

Unlike many states, Texas families don't owe:

• ❌ State income tax
• ❌ State disability insurance (SDI)
• ❌ Paid family leave taxes
• ❌ State training taxes
• ❌ Local payroll taxes

This makes Texas one of the easiest states for household employers. You're dealing with federal taxes plus one tiny state unemployment tax.

Texas Nanny Tax Deadlines

Quarterly (Every 3 Months)

Texas unemployment tax (TWC):

• 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 using the Texas Workforce Commission online system.

Federal estimated taxes (optional):

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

Most household employers skip quarterly payments and just file Schedule H with their tax return in April.

Annually (Once a Year)

W-2 for your nanny: Due January 31

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

Form 940 (federal unemployment): Due January 31, or file it as part of Schedule H

How to Register as a Household Employer in Texas

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 federal payroll taxes. It's free and takes about 5 minutes.

Go to the IRS website and apply online: irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online

See our complete guide on getting an EIN

Step 2: Register with the Texas Workforce Commission

Once you have your EIN, register for unemployment insurance:

1. Go to ui.texasworkforce.org
2. Select "Register as New Employer"
3. Choose "Domestic Employer" as your employer type
4. Enter your EIN, SSN, and basic info

You'll receive your TWC account number within a week or two.

Step 3: Give Your Nanny Tax Forms

Have your nanny complete:

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

Keep copies in your records.

Step 4: Set Up Payroll

Decide how often you'll pay your nanny (weekly, biweekly, monthly) and calculate:

• Gross wages
• Federal income tax withholding (if requested)
• Social Security + Medicare withholding (7.65% from nanny's paycheck)
• Net pay (what your nanny takes home)

You'll also set aside your employer share (7.65% Social Security + Medicare, plus FUTA and TWC unemployment).

NannyKeeper can handle all of this automatically for $10/month—more on that below.

Do Texas Families Need Workers' Comp Insurance?

No. Texas is the only state that does not require workers' compensation insurance—even for household employers.

You can buy it if you want to protect yourself from liability if your nanny gets injured on the job, but it's optional.

Most families either:

• Skip workers' comp (common for part-time nannies)
• Add their nanny to their homeowners insurance (some policies cover household employees)
• Buy a standalone policy for peace of mind (~$300-500/year)

Real-World Example: What You'll Actually Pay

Let's say you hire a full-time nanny in Texas who works 40 hours/week at $18/hour.

Gross wages: $3,120/month ($18/hour × 173.33 hours)

Employer taxes you pay:

• Social Security (6.2%): $193
• Medicare (1.45%): $45
• FUTA (0.6% on first $7,000/year): ~$4/month average
• TWC unemployment (0.59% on first $9,000/year): ~$4/month average
• Total employer taxes: ~$246/month

Employee taxes you withhold:

• Social Security (6.2%): $193
• Medicare (1.45%): $45
• Federal income tax (depends on W-4, estimate ~10%): $312
• Total withheld: ~$550/month

Your nanny's take-home: $2,570/month
Your total cost: $3,366/month ($3,120 wages + $246 employer taxes)

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

Common Texas Nanny Tax Questions

Do I really have to pay federal taxes if there's no state income tax?

Yes. The federal tax requirements apply nationwide, regardless of state. Texas families still owe Social Security, Medicare, and FUTA—they just get to skip the state income tax portion.

Can I pay my nanny as an independent contractor to avoid taxes?

No. The IRS and Texas Workforce Commission have strict rules. If you control what work is done and how it's done (which you do with a nanny), they're an employee. Misclassifying is illegal and leads to penalties.

Read more: Nanny vs. Contractor

What if my nanny is undocumented?

You still owe payroll taxes. Immigration status doesn't change tax obligations. Your nanny will need an Individual Taxpayer Identification Number (ITIN) instead of a Social Security Number, but the tax rules are the same.

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 certain conditions apply)

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

What if I've been paying under the table?

You can get compliant by filing back taxes. The IRS and TWC would rather get paid late than chase you forever. Start by calculating what you owe, file back returns, and get current going forward. The penalties are lower if you come forward voluntarily.

How to File Texas Nanny Taxes

Quarterly: TWC Unemployment

File online at ui.texasworkforce.org:

1. Log in to your employer account
2. Report wages paid during the quarter
3. Pay the unemployment tax owed (0.59% of taxable wages)

Annually: Federal Taxes

By January 31:

• Give your nanny a W-2 (showing wages and withholdings)
• File Copy A of the W-2 with the Social Security Administration

By April 15:

• File Schedule H with your personal tax return (Form 1040)
• Pay all federal nanny taxes owed (Social Security, Medicare, FUTA, minus what you withheld)

You can increase your own income tax withholding throughout the year to cover nanny taxes, or pay them all in April with your return.

Why Texas Makes It Easy

Compared to other states, Texas is refreshingly simple:

vs. California:
California has state income tax withholding, SDI, PFL, ETT, and mandatory workers' comp. Texas has... unemployment insurance. That's it.

vs. New York:
New York requires state income tax withholding, SDI, and workers' comp. Texas skips all of that.

vs. Florida:
Florida is similar (no state income tax), but Texas is even easier because you can file TWC unemployment online in minutes.

Texas families save time, money, and hassle compared to most of the country.

How NannyKeeper Can Help

Even though Texas taxes are simpler, you still have to:

• Calculate federal withholding
• Track wages and hours
• File TWC reports quarterly
• Generate W-2s
• Prep Schedule H
• Make sure you never miss a deadline

NannyKeeper handles all of it for $10/month:

• Automatic payroll calculation (federal + Texas TWC)
• Quarterly TWC filings
• 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 remind you about deadlines. You just review and submit.

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

What Happens If You Get Audited?

The IRS and Texas Workforce Commission can audit household employers. Common triggers:

• Your nanny files for unemployment
• Your nanny reports wages from an employer who didn't file taxes
• Random selection

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

• Back taxes: Everything you should have paid (up to 3 years, or more if fraud)
• Interest: From the original due date
• Penalties:
  • Failure to file: 5%/month, up to 25%
  • Failure to pay: 0.5%/month, up to 25%
  • Fraud/willful failure: Up to 100%

For a nanny earning $35,000/year, three years of back taxes could easily cost $12,000-18,000.

Getting compliant now is way cheaper than waiting for an audit.

The Bottom Line

Texas nanny taxes are simpler than most states. You'll pay:

• ~8% in employer-side federal taxes (Social Security, Medicare, unemployment)
• ~18-20% withheld from your nanny's paycheck (federal income tax, Social Security, Medicare)
• $53/year Texas unemployment insurance

For a nanny earning $3,000/month, expect to pay around $240/month in employer taxes. No state income tax means less math, fewer forms, and more time with your family.

Next steps:

1. Get your EIN (5 minutes, free)
2. Register with TWC (10 minutes, online)
3. Set up payroll (or let NannyKeeper do it)
4. Stay compliant and never worry about an audit

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

Get started with NannyKeeper →

---

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

---

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

Why Getting Compliant Matters

You might be thinking: "I'm just paying my nanny—why do I need to deal with payroll taxes?"

Here's why it matters:

Legal obligation: If you pay someone $2,700+ per year to work in your home, you're a household employer under federal law. It's not optional.

Your nanny's benefits: Paying into Social Security and Medicare means your nanny builds retirement benefits and healthcare coverage. Paying unemployment insurance means they have a safety net if they lose their job.

Avoiding penalties: Getting caught paying under the table can cost you 3+ years of back taxes, penalties up to 100% of what you owe, and interest. For a $35,000/year nanny, that's $15,000-20,000.

Background checks for you: If you ever need a security clearance, run for office, or get audited for any reason, unreported household employment can come back to haunt you.

Nanny professionalism: Paying legally shows you respect your nanny as a professional. It builds trust and makes them more likely to stay long-term.

Tips for Texas Household Employers

1. Set Up Direct Deposit

Stop writing checks every week. Direct deposit is faster, creates a paper trail, and your nanny gets paid on time even if you're traveling.

Most banks offer free direct deposit for individuals. You just need your nanny's bank account and routing number.

Read our guide: How to set up direct deposit for your nanny

2. Keep Digital Records

Save everything digitally:

• Payroll records (hours, gross pay, withholdings)
• Bank statements showing payments
• Tax forms (W-4, W-2, Schedule H)
• TWC quarterly filings

The IRS requires you to keep payroll records for at least 4 years. Cloud storage (Google Drive, Dropbox) makes this easy and protects you if your computer crashes.

3. Pay Yourself First (Tax-Wise)

Every time you pay your nanny, set aside about 8-10% of their gross pay in a separate savings account. This covers your employer-side taxes and ensures you're never scrambling to pay the IRS or TWC.

Example: Pay your nanny $2,500? Transfer $200-250 to your tax savings account immediately.

4. Communicate with Your Nanny

Tell your nanny you're paying them legally and what that means:

• They'll get a W-2 in January
• You're withholding taxes to avoid them owing a big lump sum in April
• They're building Social Security credits
• They're covered by unemployment insurance

Most nannies appreciate being paid on the books—it's professional, builds their credit history, and helps them qualify for loans.

5. Stay on Top of Deadlines

Mark these on your calendar:

• January 31: W-2 to nanny, TWC Q4 filing
• April 15: Schedule H with your tax return
• April 30, July 31, October 31: TWC quarterly filings

Missing deadlines = penalties. Set calendar reminders or use NannyKeeper to automate them.

Texas-Specific Resources

Texas Workforce Commission (TWC)

• Website: ui.texasworkforce.org
• Employer hotline: 512-463-2222
• Online filing system for unemployment tax

IRS Household Employer Resources

• IRS Publication 926: Household Employer's Tax Guide
• Schedule H Instructions
• IRS helpline: 800-829-1040

NannyKeeper Resources

• Nanny tax calculator
• Complete nanny tax guide
• Schedule H walkthrough

What If You're Already Behind?

If you've been paying your nanny off the books and want to get compliant, here's what to do:

Step 1: Don't Panic

The IRS and TWC would rather you come forward and pay late than continue avoiding taxes. Voluntary disclosure is always better than getting caught.

Step 2: Calculate What You Owe

Figure out:

• How long you've been paying your nanny
• How much you've paid them each year
• How much you should have withheld and paid in taxes

NannyKeeper can help calculate back taxes, or you can hire a CPA who specializes in household employment.

Step 3: File Back Tax Returns

File:

• Schedule H for each year you owe
• Form 940 (federal unemployment) for each year
• TWC quarterly reports for missed quarters

Yes, you'll owe penalties and interest, but they're much lower if you file voluntarily vs. waiting for an audit.

Step 4: Set Up a Payment Plan If Needed

Can't pay everything at once? The IRS offers payment plans. TWC also works with employers who need time to catch up.

Step 5: Get Current Going Forward

Once you've filed back taxes, stay current. Set up proper payroll, keep records, and never miss a deadline again.

Comparing Texas to Other States

Here's how Texas stacks up for household employers:

Texas is one of the easiest states for household employers. Lower costs, less paperwork, fewer requirements.

Final Thoughts: You Can Do This

Texas nanny taxes are simpler than almost anywhere else. No state income tax means less complexity, fewer forms, and lower costs.

The essentials:

• Federal taxes: ~8% employer-side, ~18-20% withheld from nanny
• Texas unemployment: $53/year
• No workers' comp requirement
• Deadlines: Quarterly for TWC, annual for IRS

Set aside an hour to get your EIN and register with TWC, then either handle payroll yourself or let NannyKeeper do it for $10/month.

Either way, you'll sleep better knowing you're compliant, your nanny is protected, and you won't face an audit years from now.

Get started with NannyKeeper →

---

Still have questions? Email us at support@nannykeeper.com or check out our other nanny tax guides below.

More guides:

• California Nanny Tax Guide
• New York Nanny Tax Guide
• Florida Nanny Tax Guide
• How to File Your 2025 Nanny Taxes