Nanny Taxes & Payroll in Rhode Island

Minimum Wage

Household employees must be paid at least the highest applicable federal, state, or local minimum wage rate. Rhode Island’s minimum wage rate of $16/hour applies.

The state’s minimum wage will increase to $17/hour on January 1, 2027.

Overtime Pay Rules

Household employees in Rhode Island must be paid at least time-and-a-half for hours worked over 40 in a seven-day workweek. Overtime compensation is not required for live-in employees or when work is performed on a holiday.

State Unemployment Tax & Rate

In Rhode Island, the new employer SUI (state unemployment insurance) rate is 1.21 percent (includes the 0.21 percent Job Development Assessment) on the first $30,800 of each employee’s wages. Employers with previous employees may be subject to a different rate. This is an employer-only tax.

Workers’ Compensation Insurance

Household employers in Rhode island are not required to have workers’ compensation coverage for any full- or part-time employees. However, you can choose a voluntary policy to protect both you and your employee. Get a quote on workers’ compensation insurance.

Disability Benefits Insurance

Temporary Disability Insurance Tax

Rhode Island is one of five states that have a disability insurance (TDI) tax paid by employees. This program provides short-term benefits to employees who are unable to work due to a non-work-related injury or illness. Employers must withhold this tax from their employee’s pay and remit quarterly with their unemployment and job development taxes. The TDI tax rate is 1.1 percent on the first $100,000 in wages for each employee.

Domestic Workers’ Bill of Rights

Rhode Island does not have a domestic workers’ bill of rights.

Paid Leave Laws

Healthy and Safe Families Workplace Act

Under Rhode Island’s Healthy and Safe Families Workplace Act, employees have the right to take time off to care for themselves when they are too sick to work, are injured, or have a routine medical appointment.

They may also use earned leave to deal with the impact of domestic violence, sexual assault, or stalking.

In addition, earned leave may be used to assist their child, spouse, domestic partner, or other household members for the same purposes.

While employers with fewer than 18 workers – including household employers – must provide sick and safe leave time, it doesn’t need to be paid.

Covered employees may take up to 40 hours of leave.

Learn more about the Healthy and Safe Families Workplace Act.

Other State Regulations

Job Development Tax Fund

Employers pay a 0.21% assessment to support the Rhode Island Governor’s Workforce Board, as well as employment services and unemployment insurance activities.

Each employer’s Employment Security tax rate is reduced annually by 0.21% to ensure that this program does not result in a tax increase. 

Rhode Island Payment of Wages Act

The Payment of Wages Act imposes criminal penalties on employers for knowing and willful wage-and-hour violations. If an employer fails to pay wages owed and/or vacation pay to any eligible employee who separates from employment, the employer may face a fine of up to $5,000. Criminal penalties may also be imposed if an employer fails to pay the full amount of wages lawfully owed to an employee on the next regular payday.

Also, the act penalizes employers who misclassify workers as independent contractors. Civil penalties for a first offense can range from $1,500 to $3,000 for each misclassified employee. Penalties can increase to $5,000 for each subsequent misclassified employee. As a reminder, nannies, in-home senior caregivers, housekeepers, and others are considered household employees, not independent contractors.

Household employers must provide all new hires with a written notice that includes:

• the employee’s rate of pay
• allowances, if any, claimed for meals and lodging;
• the employer’s policy on sick, vacation, personal leave, holidays, and hours;
• the employee’s employment status and whether they are exempt from minimum wage and/or overtime;
• a list of deductions that may be made from the employee’s pay;
• the number of days in the pay period, the regularly scheduled payday, and the payday on which the employee will receive their first pay;
• the employer’s contact information, including the employer’s legal name and any operating names, the physical and mailing addresses of the principal place of business, and telephone number.

The notice must be signed by the employee, and a copy must be retained by the employer.

The Wage Act applies to all employers, regardless of size or number of employees.

Helpful Links for Nanny Taxes in Rhode Island

• Rhode Island Department of Labor and Training
• Rhode Island Division of Taxation

Federal Regulations

All household employers need to follow certain federal regulations, including:

Fair Labor Standards Act (FLSA) Classification Guidelines

• Household workers are considered employees and not independent contractors. Learn more about misclassifying employees as independent contractors.
• Household workers are also non-exempt employees, meaning they receive at least time-and-a-half for hours worked over 40 per workweek. Learn more about overtime pay.

FICA Taxes

Social Security and Medicare taxes are commonly referred to as FICA taxes.

If you pay cash wages of $3,000 or more to any household employee in 2026 (or paid a domestic worker $2,800 or more in 2025), you must withhold and pay FICA taxes. FICA taxes are 15.3 percent of cash wages.

As an employer, you pay 7.65 percent (6.2 percent for Social Security and 1.45 percent for Medicare).

Your employee's share is also 7.65 percent, which you may withhold from their wages or pay yourself.

You don't withhold or owe FICA taxes on wages you pay to your spouse, child under the age of 21, parent, or any employee under 18 at any time during the calendar year.

Federal Unemployment Tax (FUTA)

If you pay a household employee total cash wages of $1,000 or more in any calendar quarter, you'll owe federal unemployment tax. This is an employer-only tax. FUTA is 6% of cash wages on the first $7,000 of wages paid to an employee.

Mileage Reimbursement

If your employee uses their own car in the course of their work, you can reimburse them for mileage. For 2026, the IRS has set the optional standard mileage rate at 72.5 cents per mile driven. Paying mileage is not mandatory in most states, and you can reimburse your employee at a different rate. However, if mileage costs cause your employee to fall below the minimum wage, you must reimburse them for mileage.

Remitting Taxes Quarterly

Household employers can remit taxes, including FICA, employee income, and federal unemployment, quarterly using Form 1040-ES. If a household employer does not remit their taxes quarterly, the entire amount will be due when they file their personal tax return. This could cause an underpayment penalty.

Year-End Requirements

By January 31, household employers must provide Form W-2 to their employees and submit Form W-3 and Copy A of Form W-2 to the Social Security Administration. Then, a household employer must file Schedule H with their personal tax return. Learn more: How to File Schedule H