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Nanny Tax (Household Employer) Calculator

Calculate the household employment ("nanny") taxes owed for a domestic employee.

Result

Employer's Share (SS + Medicare)
$1,530.00
FUTA Tax (federal unemployment)
$42.00
Total Employer Tax Cost
$1,572.00
Employee's Withheld Share
$1,530.00

Uses the 2025 nanny tax threshold ($2,800) - once you pay a household employee at or above this amount in a year, you're generally required to withhold and pay Social Security and Medicare taxes, plus federal (and often state) unemployment tax, reported annually on Schedule H.

About the Nanny Tax Calculator

This calculator estimates the federal payroll tax obligations that come with paying a household employee, such as a nanny, housekeeper, or in-home caregiver, once wages cross the annual reporting threshold. It separates what the employer owes from what should be withheld from the employee's pay, plus the federal unemployment tax that falls solely on the employer. It's meant for families trying to understand the real cost of household help before hiring.

How It Works

Enter the total annual wages you expect to pay the household employee. If wages fall below the 2025 threshold of $2,800, the calculator reports that nanny tax rules don't apply. Above that threshold, it applies the combined 15.3% Social Security and Medicare rate split evenly between employer and employee, plus a 0.6% federal unemployment (FUTA) tax on the first $7,000 of wages, and totals the employer's share with FUTA into one employer tax cost figure.

If annual wages >= $2,800: Employer Social Security/Medicare share = wages x 7.65%; Employee withheld share = wages x 7.65%; FUTA tax = min(wages, $7,000) x 0.6%; Total employer tax cost = employer share + FUTA tax.

Examples

Full-Time Nanny at $20,000 a Year

At $20,000 in annual wages, the employer's Social Security/Medicare share is $20,000 x 7.65% = $1,530, FUTA tax is $7,000 x 0.6% = $42, bringing total employer tax cost to $1,572, with an equal $1,530 withheld from the employee's pay.

Part-Time Help Under the Threshold

A household paying $2,500 in annual wages to an occasional babysitter stays below the $2,800 threshold, so no nanny tax withholding or employer tax obligation applies under this calculation.

Advantages

  • Shows the true employer cost of household help, not just the gross wages paid, by including both payroll tax and FUTA.
  • Clarifies which portion is withheld from the employee versus paid separately by the employer, reducing confusion about the split.
  • Flags whether the threshold has been crossed at all, helping families who pay occasional or part-time help determine if formal payroll obligations even apply.

Common Mistakes

  • Assuming that paying a household employee informally in cash avoids these obligations, when the requirement is based on total wages paid, not how payment is made.
  • Overlooking that the threshold applies to cumulative wages paid to one employee over the full year, not to any single pay period.
  • Forgetting that FUTA tax is an employer-only cost and should never be withheld from the employee's pay, unlike the Social Security and Medicare shares.

Edge Cases to Watch For

  • The $2,800 threshold behaves as a cliff rather than a phase-in: wages just under it trigger no tax at all, while crossing it applies the full 15.3% and FUTA calculation to the entire wage amount, not just the amount above the threshold.
  • FUTA tax only applies to the first $7,000 of wages per year, so employer FUTA cost stops growing once wages exceed that wage base, even though Social Security and Medicare shares keep scaling with total wages.
  • The calculator covers federal obligations only; it does not include state unemployment insurance tax, which most states also require household employers to pay, so the true total employer cost is typically higher than what's shown here.

Common Use Cases

  • Families budgeting for the true cost of hiring a nanny, housekeeper, or in-home caregiver.
  • Household employers preparing to file Schedule H and needing to estimate the tax amounts involved.
  • Part-time or seasonal employers checking whether their wage level crosses the reporting threshold.
Written & fact-checked by the Calculateus TeamLast updated August 5, 2026How we verify our formulas

Frequently asked questions

Why does hiring a nanny create employer tax obligations most people don't expect?

The IRS treats anyone who controls what work is done and how it's performed (like a nanny, housekeeper, or in-home caregiver) as a household employee, not an independent contractor, which triggers the same payroll tax obligations as any other employer relationship - many families are surprised to learn that simply paying someone cash for regular household help above the threshold creates formal tax filing and withholding requirements.

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Conclusion

Household employment carries payroll tax responsibilities that are easy to overlook outside a traditional workplace setting. This calculator gives a quick estimate of what those federal obligations look like once wages cross the threshold, though state-level unemployment tax and annual filing steps still need to be handled separately.

References