Budgeting for a nanny as an employer

Price the agreed hours

Use an hourly quote for the duties, children and schedule you need. Our default hourly rate is an editable planning assumption, not an official local nanny average. Published Care.com rates offer context but reflect a particular platform and sample.

The calculator uses time-and-a-half for a live-out nanny’s hours over 40 per week. A live-in arrangement changes the federal rule; state rules, daily overtime, paid leave and other obligations may add costs.

Add employer taxes and other costs

IRS Publication 926 sets the 2026 household employee Social Security and Medicare cash-wage threshold at $3,000. When the threshold is met, employer FICA applies to the wages, subject to the Social Security wage base.

The calculator assumes pay spread across four quarters for the FUTA test and a 0.6% net rate when the full state credit is available. Change the rate for credit reductions or a different credit situation. State unemployment tax, workers’ compensation, insurance, paid leave, payroll service and backup care belong in additional annual costs.

Treat each nanny-share family as an employer

Each participating employer has its own wage and FUTA calculations. A share does not simply divide every tax bill by the number of families. The tool splits a premium-adjusted wage first, then calculates each family’s employer taxes.

Agree on working hours, hosting, illness, paid holidays, termination and replacement care in writing. The tool compares cost; it does not establish employment compliance.

Sources and further reading

• IRS Publication 926: household employers
• DOL: domestic service hours

Planning guidance; individual provider arrangements, benefit plans and tax circumstances vary.