Being a household employer
How the nanny tax works in 2026
When you pay a nanny, housekeeper, senior caregiver or other household worker above the IRS cash-wage threshold for the year, you become a household employer subject to federal employment taxes. The obligation has three parts: employer FICA (matching the employee's Social Security and Medicare), FUTA, and withholding the employee's share of FICA from each paycheck.
Employer costs at a glance
You owe 6.2% of gross wages for Social Security (on wages up to $184,500 in 2026) and 1.45% for Medicare, totaling 7.65% in employer FICA. FUTA adds 0.6% on the first $7,000 of wages (after the standard 5.4% state credit), a flat $42 per year. These are costs above and beyond the wage itself.
| Nanny annual pay | Employer FICA | FUTA | Total employer cost |
|---|---|---|---|
| $20,000 | $1,530 | $42 | $21,572 |
| $30,000 | $2,295 | $42 | $32,337 |
| $40,000 | $3,060 | $42 | $43,102 |
| $50,000 | $3,825 | $42 | $53,867 |
Employer FICA 7.65% + FUTA 0.6% on first $7,000. Wages under the SS cap of $184,500.
Questions
Nanny tax calculator FAQ
What is the nanny tax?
The nanny tax refers to the federal employment taxes a household employer must pay when they hire a nanny, babysitter, housekeeper or other domestic worker and pay them above the IRS threshold. It includes the employer's share of Social Security (6.2%) and Medicare (1.45%), plus Federal Unemployment Tax (FUTA) of 6% on the first $7,000 in wages, reduced to 0.6% after the standard 5.4% state credit.
How much does the nanny tax cost the employer?
The employer's share is 7.65% of gross wages for FICA (6.2% Social Security plus 1.45% Medicare) plus 0.6% FUTA on the first $7,000 in wages ($42). On a $30,000 annual nanny salary, the employer owes roughly $2,337 in employer FICA plus $42 in FUTA, totaling about $2,379 in additional taxes beyond the wage itself.
Do I have to withhold taxes from my nanny's pay?
You must withhold the employee's share of Social Security (6.2%) and Medicare (1.45%) from each paycheck. Federal income tax withholding is optional for household employees — you are not required to do it, but your nanny can request it by filing a W-4 with you.
How do I report nanny taxes to the IRS?
You report household employment taxes on Schedule H (Form 1040), which you file with your personal tax return. You also need to provide your nanny with a W-2 by January 31 and file Copy A with the Social Security Administration. An EIN (Employer Identification Number) is required, which you can obtain from the IRS online.
What is the FUTA tax for household employers?
The Federal Unemployment Tax Act (FUTA) imposes a 6.0% tax on the first $7,000 of wages per employee per year. Most employers receive a 5.4% credit for state unemployment taxes paid, bringing the effective FUTA rate to 0.6%. On $7,000, that is $42 per year per household employee.
Can I deduct nanny costs on my taxes?
You cannot deduct the wages themselves, but you may be eligible for the Child and Dependent Care Tax Credit (CDCTC), which covers up to $3,000 in expenses for one qualifying dependent or $6,000 for two or more. The credit ranges from 20% to 35% of expenses depending on your income. You must have the nanny's SSN or ITIN to claim it.
- Sources: IRS Pub. 926 (Household Employer's Tax Guide) · FICA: 6.2% SS + 1.45% Medicare (employer share) · FUTA: 6.0% on $7,000, net 0.6% after state credit · SSA 2026 wage base $184,500.
- 🔄 Last updated July 2026 · Tax year 2026
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