Do I Owe Nanny Tax in 2026? The $3,000 and $1,000 Tests

Household employees include nannies, babysitters, housekeepers, caregivers and others who work in your home under your control (Publication 926). A worker an agency employs, or who runs their own business and sets their own terms, usually isn't your employee.

Social security and Medicare

Owed if you pay one employee $3,000 or more in cash wages in 2026 ($2,800 in 2025). Count each employee separately. Wages to your spouse, your parent (with limited exceptions), your child under 21, or an employee under 18 — unless household work is their principal occupation — are not counted. A student under 18 babysitting is the classic exempt case.

FUTA

Owed if you paid $1,000 or more in cash wages to household employees in any calendar quarter of this year or last year. The same family exemptions apply except for employees under 18. The tax is 0.6% of the first $7,000 per employee when you get the full state credit.

Income tax

You don't have to withhold federal income tax unless the employee asks and you agree. If you do, it goes on the W-2 and Schedule H.

Last reviewed 2026-10-28. General information, not tax advice. Your tax adviser can tell you what applies to you.