Nanny Tax Calculator (Plus Nanny vs Daycare)

The nanny tax is the payroll tax a family owes as a household employer. For 2026, once you pay any one household employee $3,000 or more in cash wages, you owe Social Security and Medicare (FICA): 6.2% plus 1.45%, a 7.65% employer share, and a matching 7.65% is the employee's, normally withheld from pay. Separately, if you pay $1,000 or more in cash wages in any calendar quarter, you owe federal unemployment tax (FUTA), and most states add their own unemployment tax (SUTA). Thresholds and the FICA figures are from IRS Publication 926.

Budget roughly 8% to 12% on top of the gross wage for the employer taxes, more if you also pay the employee's FICA share. On a $52,000 wage with a 2.7% SUTA rate, the employer taxes come to about $4,200 (Social Security and Medicare $3,978, FUTA $42, SUTA $189), so the true cost is around $56,200. Enter your own wage, hours, and state SUTA above to see your figure. State income tax withholding, workers' compensation, and any benefits are extra.

It depends mostly on how many children you have. Daycare is priced per child, while one nanny usually covers all of them for roughly the same cost, so the more children you have, the more a nanny competes. For one child, daycare is almost always cheaper; by two or three children the totals often cross. The comparison in the calculator flips automatically as you change the number of children and the daycare price.

FUTA is the federal unemployment tax: 6.0% on the first $7,000 of wages, reduced by a state credit of up to 5.4% when you pay your state tax on time, so the effective rate is usually 0.6%, about $42 a year at the cap. SUTA is your state's unemployment tax, and both the rate and the taxable wage base vary widely by state and by your employer experience rating. Because SUTA is state-specific, this tool takes your state rate and wage base as inputs rather than guessing.

Paying cash off the books is illegal once you cross the thresholds, and it exposes both sides: the family can owe back taxes and penalties, and the nanny loses Social Security credits, unemployment eligibility, and a verifiable income history. Paying on the books also lets you use a Dependent Care FSA or the child and dependent care tax credit, which often offsets much of the employer tax. Household employers report the taxes on Schedule H with their own tax return.

No. The calculator runs entirely in your browser and stores nothing on our servers. There is no email box and no sign-up. Your inputs are only reflected in the page's web address so you can bookmark, share, or print your result; clear the link and they are gone.