Nanny Tax Calculator (2026)
Estimate your real cost as a household employer — and your nanny's take-home pay — including Social Security, Medicare, and unemployment taxes.
How Nanny Taxes Work
When you pay a nanny $3,000 or more in cash wages in a year (2026 threshold), 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).
- Medicare — 1.45% of wages (employer share).
- Federal unemployment (FUTA) — 0.6% on the first $7,000 (about $42/year).
- 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 gross wages: 6.2% Social Security, 1.45% Medicare, 0.6% FUTA, plus 1–4% state unemployment. On a $40,000 salary that's roughly $4,000. Your nanny also has 7.65% FICA withheld from their pay.
What is the nanny tax threshold for 2026?
If you pay a household employee $3,000 or more in cash wages in 2026 (the IRS threshold, adjusted annually; it was $2,800 for 2025), you owe Social Security and Medicare taxes and must issue a W-2. FUTA applies once you pay $1,000+ in any calendar quarter.
Who pays nanny taxes, the family or the nanny?
Both. The family pays the employer share of FICA (7.65%) plus unemployment taxes and withholds the employee share (7.65%) and any income tax from the nanny's check, then remits it all via Schedule H.
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.
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.
Open the Cost Calculator