Nanny Taxes in Arizona

Minimum Wage

Household employees must be paid at least the highest federal, state, or applicable local minimum wage rates. Arizona’s minimum wage rate is adjusted annually to reflect changes in the cost of living. The state’s 2025 minimum wage is $14.70/hour.

Household employers in Arizona must display a minimum wage poster to notify their employees of their rights under state law. The Industrial Commission of Arizona has published an updated minimum wage model poster (English | Spanish) employers can use to satisfy the poster requirement.

In Flagstaff, the 2025 minimum wage rate is $17.85/hour.

In Tucson, the minimum wage is $15/hour. After 2025, the minimum wage may increase each January, depending on the inflation rate.

Overtime Pay Rules

Household employees in Arizona are required to 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.

State Unemployment Tax & Rate

In Arizona, the new employer SUI (state unemployment insurance) rate is 2.0 percent on each employee’s first $8,000 of wages. Employers with previous employees may be subject to a different rate. This is an employer-only tax.

Workers’ Compensation Insurance

Household employers in Arizona 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

The state has no disability benefits rules related to nanny tax and payroll.

Domestic Workers’ Bill of Rights

The state has no domestic workers’ bill of rights.

Paid Leave Laws

Arizona’s paid sick leave law covers small employers including families with household help. Small employers (less than 15 employees) must provide up to 24 hours of sick leave a year. Employees earn sick leave at the rate of one hour for every 30 hours worked. Full-time, part-time, and temporary employees are all covered under the law and will earn sick leave based on hours worked. Employers can require newly hired workers to wait 90 days until they ask for paid sick time. Employees can take sick time for themselves and for a family member who has an allowable reason for sick leave. Paid sick leave can be used for:

• Physical or mental illness, injury, or health condition
• Getting a diagnosis, preventative care, or treatment
• A child’s school or place of care has been closed due to a public health emergency
• Employee or family member’s “presence in the community may jeopardize the health of others” due to a suspected or exposure to a communicable disease

The law also contains a safety clause for victims of domestic violence, sexual assault, or stalking. Employees can use leave to address psychological, physical, or legal reasons.

Other State Regulations

The state has no other regulations related to nanny tax and payroll.

Helpful Links for Nanny Taxes in Arizona

• Arizona Labor Department
• Arizona Department of Revenue

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