Nanny Tax Calculator (2026 and 2027)
Estimate your real cost as a household employer — and your nanny's take-home pay — including Social Security, Medicare, and unemployment taxes, with the 2026 and 2027 thresholds.
How Nanny Taxes Work
When you pay a nanny $3,000 or more in cash wages in 2026 ($3,100 in 2027), the IRS treats you as a household employer. That means you owe employment taxes and must give your nanny a W-2 — they're an employee, not an independent contractor. Here's what makes up the "nanny tax":
What you (the employer) pay on top of wages
- Social Security — 6.2% of wages (employer share), on wages up to $184,500 in 2026 and $192,300 in 2027.
- Medicare — 1.45% of wages (employer share).
- Federal unemployment (FUTA) — 0.6% on the first $7,000 (about $42/year), once you pay $1,000 or more in a calendar quarter.
- State unemployment (SUI) — typically 1–4% on a state wage base; varies widely.
What you withhold from the nanny's pay
- Employee FICA — 7.65% (their Social Security + Medicare share).
- Income tax — optional but common; based on the nanny's Form W-4.
You remit everything to the IRS (via Schedule H with your Form 1040) and your state. Learn the full process in our nanny taxes & payroll guide.
The Upside: Tax Breaks for Paying Legally
Paying your nanny on the books unlocks childcare tax benefits that often offset much of the employer tax:
- Dependent Care FSA — set aside up to $7,500 pre-tax. Estimate your savings.
- Child & Dependent Care Credit — 20%–50% of up to $3,000 (one child) or $6,000 (two+) of care costs in 2026, including your share of the nanny taxes. Estimate your credit or read how it works.
See typical pay ranges in our nanny salary by state guide, or nanny costs by city.
Frequently Asked Questions
How much are nanny taxes?
As a household employer you pay about 10% on top of your nanny's gross wages: 6.2% Social Security, 1.45% Medicare, 0.6% federal unemployment (FUTA), plus state unemployment tax (typically 1–4%). On a $40,000 salary that's roughly $4,000 in employer taxes. Your nanny also has 7.65% FICA withheld from their pay, which you remit.
What is the nanny tax threshold for 2027?
$3,100. If you pay a household employee $3,100 or more in cash wages in 2027, you owe Social Security and Medicare taxes and must give them a W-2. The threshold is set each year by the Social Security Administration; it is $3,000 for 2026 and was $2,800 for 2025. Federal unemployment (FUTA) tax still applies once you pay $1,000 or more in any calendar quarter.
What is the nanny tax threshold for 2026?
If you pay a household employee $3,000 or more in cash wages in 2026 (it was $2,800 for 2025), you must pay Social Security and Medicare taxes and issue a W-2. The federal unemployment (FUTA) tax applies once you pay $1,000 or more in any calendar quarter.
Who pays nanny taxes, the family or the nanny?
Both share the cost. The family (employer) pays the employer half of Social Security and Medicare (7.65%) plus unemployment taxes, and withholds the employee half (7.65%) plus any income tax from the nanny's paycheck. The family remits all of it to the IRS and state, usually via Schedule H with their tax return.
How do I pay nanny taxes?
Get an EIN, withhold FICA (and optionally income tax) each pay period, make estimated tax payments during the year, file Schedule H with your Form 1040, and give your nanny a W-2 by January 31 (February 1, 2027 for 2026 wages, because January 31, 2027 is a Sunday). Many families use a nanny payroll service to automate this. Paying legally also lets you use a Dependent Care FSA and the Child & Dependent Care Tax Credit.
Can I pay my nanny as a 1099 contractor?
Almost never. The IRS classifies nannies as employees because you control their work, schedule, and how the job is done. Misclassifying a nanny as a 1099 contractor can lead to back taxes and penalties.
Sources
IRS Publication 926 (2026): household employer rules, the $3,000 2026 threshold, FUTA's $1,000-a-quarter test and the W-2 due date · Social Security Administration, "Cost-of-Living Increase and Other Determinations for 2027" (Federal Register doc. 2026-21796): the $3,100 2027 domestic employee coverage threshold and $192,300 2027 wage base · Rev. Proc. 2025-32: 2026 income tax brackets and standard deduction used for the withholding estimate · Rev. Proc. 2026-35: 2027 brackets and standard deduction ($16,600 single, $33,200 married filing jointly). Checked November 6, 2026.
Compare Nanny Costs to Other Care
See how a nanny stacks up against daycare, a nanny share, and an au pair in your area — including tax savings.
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