How much can I pay a nanny before I owe taxes in 2026?
Updated November 6, 2026 · For 2026 · General information, not tax or legal advice
Two numbers decide whether you are a household employer in 2026.
$3,000 per employee: Social Security and Medicare
Once you pay one household employee $3,000 or more in cash wages during 2026, you owe Social Security and Medicare (FICA) on *all* of their wages for the year, not just the amount over $3,000. The rate is 7.65% withheld from your employee and 7.65% paid by you. The threshold was $2,800 in 2025 and rises with average wages.
If you expect to cross it, start withholding from the first paycheck. Waiting until the threshold hits leaves you with a catch-up deduction your nanny will not enjoy.
$1,000 per quarter: federal unemployment tax
If you pay $1,000 or more in total household wages in any calendar quarter of 2026 or 2025, you owe FUTA for the whole year. It is 6% of the first $7,000 per employee, reduced to 0.6% once you pay your state unemployment tax on time. That caps federal unemployment tax at $42 per employee per year.
State thresholds are often lower
Most states use the same $1,000-per-quarter rule for household employers, but some start sooner (New York at $500 in a quarter, for example) and a few use annual wages instead. State unemployment tax is the one most families forget. See your state guide for the exact rule and the registration link.
Wages that do not count
Cash wages means pay for work. These are excluded from the threshold and from taxes:
- Reimbursements for mileage, tolls or supplies under an accountable plan (see mileage reimbursement).
- The value of meals and lodging you provide for your convenience.
- Wages to your spouse, your child under 21, your parent (usually) or a student under 18 (see household employee rules).
What to do once you cross it
Get an EIN, withhold 7.65%, register for state unemployment, give a W-2 in January and file Schedule H with your tax return. The calculator shows the full cost for your state; CareTab tracks the threshold and every filing for $14.99 a month.
Frequently asked
What is the nanny tax threshold for 2026?
$3,000 in cash wages to one household employee during 2026 triggers Social Security and Medicare taxes. $1,000 in total household wages in any calendar quarter triggers federal unemployment tax (FUTA).
Is the threshold per employee or per household?
The $3,000 Social Security and Medicare threshold is per employee. The $1,000 quarterly FUTA threshold counts all household employees together.
If I pay under $3,000 do I owe anything?
No Social Security or Medicare. You may still owe FUTA if total household wages hit $1,000 in a quarter, and your state unemployment threshold may be lower.
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