Nanny Tax Calculator

The “nanny tax” refers to the payroll taxes a household employer must pay when they hire a nanny, housekeeper, or other domestic worker who earns above the annual threshold. Many families unknowingly skip this obligation — which can create significant penalties and back-tax liability.

2024 thresholds and rates:

• If you pay a household employee $2,700 or more in 2024, you owe household employer taxes.
• Social Security tax: 6.2% employer + 6.2% employee = 12.4% combined
• Medicare tax: 1.45% employer + 1.45% employee = 2.9% combined
• FUTA (Federal Unemployment): 6% on first $7,000 of wages (you pay this alone; typically ~$420/year after state credit)
• State unemployment: varies by state (1–5% on first $7,000–$47,000 of wages)

Formula: Employer-Side Tax = Annual Wages × (6.2% + 1.45%) = Annual Wages × 7.65% Employee-Side Tax = same 7.65% (withheld from nanny’s paycheck) Total FICA Cost = Annual Wages × 15.3%

Worked example: Nanny earns $30,000/year.

Employer FICA = $30,000 × 7.65% = $2,295 Employee FICA (withheld) = $30,000 × 7.65% = $2,295 FUTA = $7,000 × 6% × 0.10 (after state credit) = $42

Total additional employer cost = ~$2,337/year (7.8% on top of wages)

Tax benefits that offset the cost:

• Dependent Care FSA: contribute up to $5,000 pre-tax → saves ~$1,500/year in taxes
• Child and Dependent Care Tax Credit: 20–35% of up to $3,000 in qualifying expenses

File Schedule H with your annual Form 1040. Many families use payroll services like HomePay or NannyChex to handle the filings automatically.