If you pay a household employee $2,700+ in 2026, you owe FICA taxes (15.3% split between you and the employee) plus FUTA. Report everything on Schedule H with your personal tax return. A nanny earning $40,000 costs roughly $3,347 in employer taxes.
- FICA threshold: $2,700 per employee for 2026
- Employer taxes add 8-10% on top of gross wages
- No quarterly deposits needed — pay via Schedule H or estimated taxes
What Taxes Do You Owe as a Household Employer?
When you pay a nanny, housekeeper, caregiver, or other household worker above the IRS threshold, you become a household employer with specific tax obligations. These taxes fall into two categories: taxes you pay as the employer and taxes you withhold from your employee's wages.
| Tax | Employer Pays | Withheld from Employee |
|---|---|---|
| Social Security | 6.2% (up to $176,100) | 6.2% (up to $176,100) |
| Medicare | 1.45% (no cap) | 1.45% (no cap) |
| FUTA | 0.6% (first $7,000) | N/A |
| State Unemployment | Varies by state | N/A |
| Federal Income Tax | N/A | Optional (per W-4) |
| State Income Tax | N/A | Required in most states |
2026 Tax Thresholds
Not every household payment triggers tax obligations. The IRS sets annual thresholds that determine when taxes kick in.
| Tax Type | 2026 Threshold | Applies To |
|---|---|---|
| FICA (Social Security + Medicare) | $2,700 | Per employee, per year |
| FUTA | $1,000 | Total to all employees in any quarter |
The $2,700 FICA threshold is per employee. If you pay one nanny $2,000 and a housekeeper $2,000, neither triggers FICA. But the $1,000 FUTA threshold applies to total wages across all household employees in any calendar quarter.
FICA Taxes (Social Security + Medicare)
FICA is the largest household employment tax. Both you and your employee contribute equal shares, totaling 15.3% of wages.
Yes. Some employers choose to pay both the employer and employee shares of FICA rather than withholding from the employee's wages. If you do this, the employee's share you pay is considered additional income on their W-2 — but it is not subject to FICA or FUTA itself.
FUTA Tax (Federal Unemployment)
The Federal Unemployment Tax Act (FUTA) funds state unemployment insurance programs. Unlike FICA, FUTA is paid entirely by the employer — you do not withhold any FUTA from your employee.
| FUTA Detail | Amount |
|---|---|
| Gross rate | 6.0% on first $7,000 |
| State credit | Up to 5.4% |
| Effective rate | Usually 0.6% |
| Max per employee | $42/year |
Most employers pay the effective 0.6% rate because they also pay state unemployment taxes. If your state has an outstanding federal loan balance, the credit may be reduced.
State Unemployment and Income Taxes
Every state (except Alaska, which has no SUTA threshold for household employers) requires household employers to pay state unemployment insurance (SUTA). Requirements vary widely.
“Nine states have no income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.
Full Worked Example: Nanny Earning $40,000
Here is a complete breakdown of what a household employer in California owes when paying a nanny $40,000 per year.
| Tax | Rate | Wage Base | Employer Cost |
|---|---|---|---|
| Social Security (employer) | 6.2% | $40,000 | $2,480 |
| Medicare (employer) | 1.45% | $40,000 | $580 |
| FUTA (effective) | 0.6% | $7,000 | $42 |
| CA SUTA (new employer) | 3.4% | $7,000 | $238 |
| CA ETT | 0.1% | $7,000 | $7 |
| Total Employer Tax Cost | $3,347 |
You also withhold $2,480 (Social Security) + $580 (Medicare) = $3,060 from the nanny's paychecks throughout the year.
Filing Schedule H
Household employment taxes are reported on Schedule H (Form 1040), which you attach to your personal income tax return.
Calculate your total FICA liability
Add FUTA tax
Complete Schedule H
File W-2 and W-3 with SSA
Payment Deadlines
Household employers do not make separate quarterly payroll tax deposits like business employers. Instead, you increase your estimated tax payments or W-4 withholding to cover the liability.
| Deadline | Action |
|---|---|
| January 31 | Give W-2 to employee; file W-2/W-3 with SSA |
| April 15 | File Schedule H with your personal tax return (Form 1040) |
| Quarterly (varies) | File state unemployment returns and pay SUTA |
Since you pay household employment taxes once a year on April 15, the IRS expects you to account for them throughout the year. You can either increase your W-4 withholding at your own job or make quarterly estimated tax payments (Form 1040-ES). Failing to do so can result in an underpayment penalty.
Frequently Asked Questions
PAYHROLL Team
Payroll Experts
Every article is researched and reviewed by our editorial team with expertise in IRS compliance, household employment law, and small business payroll. We fact-check against IRS publications and update content when tax rules change.
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