Nanny Tax Calculator 2026 β Household Employee Tax Cost Estimator
Calculate the true cost of employing a nanny or household worker in 2026. See employer FICA, FUTA, SUTA, total employer cost, and Schedule H obligations.
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Threshold: $2,800+/year triggers FICA obligation Applies to first $7,000β$15,000 of wages (varies by state)
Examples:
$0
Total Annual Employer Cost
$0
Employer FICA (7.65%)
$0
FUTA Cost (0.6%)
0%
Effective Cost Increase
Monthly Cost Breakdown
| Item | Annual | Monthly | Per Pay Period |
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How to Use This Nanny Tax Calculator
Enter your nanny's annual gross salary, pay frequency, and your state's SUTA rate. The calculator shows the employer's share of FICA taxes, FUTA, and SUTA, then totals your all-in employer cost including the salary. Taxes are computed per pay period for payroll planning.
The Formula
Employer FICA = Salary Γ 7.65% (SS 6.2% on first $184,500 + Medicare 1.45%)
FUTA = min(Salary, $7,000) Γ 0.6% (after 5.4% state credit against 6.0% gross rate)
SUTA = min(Salary, wage base) Γ SUTA rate
Total Employer Cost = Salary + Employer FICA + FUTA + SUTA
Cost Increase % = (Employer FICA + FUTA + SUTA) / Salary Γ 100
FUTA = min(Salary, $7,000) Γ 0.6% (after 5.4% state credit against 6.0% gross rate)
SUTA = min(Salary, wage base) Γ SUTA rate
Total Employer Cost = Salary + Employer FICA + FUTA + SUTA
Cost Increase % = (Employer FICA + FUTA + SUTA) / Salary Γ 100
Example
Full-time nanny, $40,000/year salary, 2.7% SUTA on $12,000 wage base:
Employer FICA: $40,000 Γ 7.65% = $3,060
FUTA: $7,000 Γ 0.6% = $42
SUTA: $12,000 Γ 2.7% = $324
Total employer cost: $40,000 + $3,060 + $42 + $324 = $43,426
Effective cost increase: $3,426 / $40,000 = 8.6%
Employer FICA: $40,000 Γ 7.65% = $3,060
FUTA: $7,000 Γ 0.6% = $42
SUTA: $12,000 Γ 2.7% = $324
Total employer cost: $40,000 + $3,060 + $42 + $324 = $43,426
Effective cost increase: $3,426 / $40,000 = 8.6%
Extended
Legal vs Under-the-Table Comparison
See the true cost of paying legally versus the penalties of paying off the books
Legal vs Under-the-Table: True Cost Comparison
Paying under the table saves ~8β10% upfront but carries serious penalty risk. Here is the math.
Cost Comparison (based on your salary inputs above)
| Item | Pay Legally | Pay Under-the-Table |
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IRS Penalty Risk: If Caught Paying Under the Table
| Penalty Type | Rate | Estimated Amount |
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Benefits of Paying Legally
- Child and Dependent Care Credit: Legally paid childcare qualifies for up to $3,000 (1 child) or $6,000 (2+ children) in qualifying expenses, generating a $600β$2,100 credit
- Dependent Care FSA: Up to $5,000/year in pre-tax payroll deductions for legally paid childcare β saving you $1,250β$2,000 in federal tax depending on your bracket
- Worker protection: Your nanny receives Social Security work credits and Medicare eligibility β she can collect benefits based on her employment history
- Unemployment insurance: If you legally employed and later had to let her go, she can collect unemployment; under the table she cannot
- Peace of mind: No risk of IRS audit, back taxes, interest, or penalties
Frequently Asked Questions
What is the nanny tax?
The "nanny tax" refers to the federal employment taxes you must pay when you hire a household worker β such as a nanny, housekeeper, gardener, or senior caregiver β and pay them $2,800 or more in 2026. It includes the employer's share of Social Security and Medicare taxes (FICA), federal unemployment tax (FUTA), and usually state unemployment tax (SUTA). These are reported on Schedule H filed with your personal 1040.
What is the 2026 household employer threshold?
For 2026, you must pay FICA taxes on wages paid to a household employee if you pay them $2,800 or more in the calendar year. If you pay less than this threshold, no FICA taxes are owed for that worker. Note that there is no threshold for FUTA β if you paid $1,000 or more in any calendar quarter in 2024 or 2026, FUTA applies.
Do I need to withhold federal income tax from my nanny's paycheck?
Federal income tax withholding is optional for household employees β you only withhold it if both you and your employee agree in writing. However, you are required to withhold and remit the employee's share of FICA (6.2% Social Security + 1.45% Medicare = 7.65%) if you pay over the $2,800 threshold. If you do not withhold, you can pay the employee's share yourself as a bonus, but it then becomes additional taxable wages.
How do I file the nanny tax?
Household employment taxes are reported on Schedule H, which you attach to your personal Form 1040. If you owe more than $1,000 in combined FICA and income tax withholding, you should make quarterly estimated tax payments (Form 1040-ES) to avoid underpayment penalties. You must also give your nanny a W-2 by January 31 each year and file a W-3 with the Social Security Administration.
Is it really only about 10% more expensive to pay legally?
Yes, approximately. The employer's total additional cost is about 9.3%β10% of the nanny's gross salary (7.65% employer FICA + ~0.6% FUTA + ~1.75% SUTA). However, paying under the table risks penalties of 100% of unpaid FICA (both employer and employee shares), plus failure-to-file penalties of up to 25% of unpaid taxes, plus interest. The legal path also allows you to claim the Child and Dependent Care Credit for childcare expenses.