Nanny tax in 2026, explained
Updated October 25, 2026
Short answer
In 2026 you owe federal nanny tax if you pay one household employee $3,000 or more in cash wages in the year: you withhold 7.65% of their pay for Social Security and Medicare and pay a matching 7.65%. If you pay $1,000 or more in any calendar quarter you also owe federal unemployment tax. In California you must register with the EDD within 15 days of paying $750 in a quarter. You report it all on Schedule H with your Form 1040 and give your nanny a W-2.
The thresholds at a glance
| Rule | 2026 threshold | What you do |
|---|---|---|
| Social Security and Medicare (FICA) | $3,000 in cash wages to one employee in the year | Withhold 6.2% + 1.45% from pay, pay the same again yourself |
| Federal unemployment (FUTA) | $1,000 in cash wages to all household employees in any quarter | Pay 6% of the first $7,000 per employee, usually 0.6% after the state credit |
| Federal income tax | No threshold | Withhold only if you and your nanny agree to it |
| California EDD registration | $750 in cash wages in a quarter | Register within 15 days, withhold State Disability Insurance |
| California unemployment and training tax | $1,000 in cash wages in a quarter | Pay UI and ETT on the first $7,000 per employee |
The $3,000 figure is up from $2,800 in 2025. Wages paid to your spouse, your child under 21, your parent, or any employee under 18 (unless childcare is their main job) are not subject to Social Security and Medicare tax.
Is your nanny an employee or a contractor?
If you decide the hours, the duties and how the work is done in your home, your nanny is almost always your household employee, not a contractor, even if they also work for other families. A sitter you book now and then who sets their own terms is more often self-employed. The IRS test is about control, not what you call the arrangement.
What to file and when
- Get an Employer Identification Number (EIN) from the IRS; you cannot use your Social Security number on a W-2.
- Give your nanny Form W-2 by January 31, and file it with the Social Security Administration with Form W-3 by the same date.
- Report federal household employment taxes on Schedule H with your Form 1040, and raise your own withholding or pay estimated tax so you are not short in April.
- In California, file EDD household employer returns, quarterly or annually if you elect it, and pay SDI, UI and ETT.
- Keep pay records, and give a pay stub with hours and rate each payday as California requires.
How Nanny helps
Nanny keeps track of what you have paid each caregiver through the app, tells you when you cross the threshold, and hands you off to a household payroll partner. We do not file taxes or give tax advice.
This guide is general information, not tax or legal advice. Rules change, so check with a tax professional or the agency linked below before you file.
Questions
$3,000 in cash wages paid to one household employee during 2026. At or above that, you withhold and pay Social Security and Medicare tax on all of that employee's cash wages for the year.
Only if the sitter is your employee and you pay them $3,000 or more in 2026. Occasional sitters who set their own terms are often self-employed, and sitters under 18 whose main job is not childcare are exempt from Social Security and Medicare tax.
Usually each family is a separate employer for the hours and pay it covers, so each family applies the thresholds to its own share of the wages and issues its own W-2.
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