Nanny Taxes in Maine

Household employers need to comply with tax, wage, and labor laws that affect nannies, in-home senior caregivers, and other household employees. While federal laws cover employers in all states, there are also state- and city-specific regulations that employers must follow. Here’s what you need to know about nanny taxes in Maine.

Maine Minimum Wage

Household employees must be paid at least the highest of the federal, state, or applicable local minimum wage rates. Maine’s state minimum wage of $14.15/hour applies. However, Portland’s local minimum wage rate is $15/hour and may change annually based on a cost of living increase. Rockland’s minimum wage is also $15/hour. Each January 1, beginning in 2025, Rockland will adjust its rate based on the consumer price index.

Overtime

Household employees in Maine 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.

Maine State Unemployment Tax & Rate

In Maine, the new employer SUI (state unemployment insurance) rate is 2.32 percent on the first $12,000 of wages for each employee. Employers with previous employees may be subject to a different rate of up to 6.03 percent. These rates include a competitive-skills scholarship fund assessment (0.13 percent) and an unemployment program administrative fund assessment (0.15 percent). This is an employer-only tax.

Workers’ Compensation Insurance

Household employers in Maine 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.

Paid Family and Medical Leave Benefits Program

Maine’s paid family and medical leave program will cover all employers with one or more employees working in Maine. Beginning January 1, 2025 employers and employees will contribute to a paid Family and Medical Leave Insurance Fund. Benefits will become available on May 1, 2026.

Employees are eligible to take up to 12 weeks of paid leave in a benefit year for any one or a combination of covered reasons.

Family leave may be taken to:

• Bond with their child during the first 12 months after the child’s birth or during the first year after placement of the child through foster care or adoption;
• Care for a family member with a serious health condition such as an illness, injury, impairment, pregnancy, recovery from childbirth or physical, mental, or psychological condition that involves inpatient care in a medical treatment center or continuing treatment by a healthcare provider;
• Attend to a qualifying exigency related to a family member’s active duty service as determined pursuant to the federal Family and Medical Leave Act.
• Care for a family member who is a covered service member; or
• Take “safe leave”

A “family member” includes a parent, grandparent, grandchild, sibling, spouse, or any other individual with whom the covered employee has a significant personal bond that is like a family relationship.

Medical leave may be taken for:

• Serious health condition of the employee or a family member;
• The birth of the employee’s child or placement of a child under 16 years through adoption;
• The donation of an organ by that employee for a human organ transplant; or
• The death or serious health condition of a family member

In order to fund the program, beginning January 1, 2025, employers must remit premiums to the Fund on a quarterly basis in the amount of not more than 1.0% of wages for each Maine employee. The premium amount is split evenly between employer and employees. However, for employers with fewer than 15 employees, which likely covers all household employers in the state, there is no employer contribution. They are only required to remit the employee’s share (50% of the required premium – or 0.5% of wages – to the fund) or the employer can choose to pay this premium on their employee’s behalf.

Under the program, employees are entitled to receive a weekly benefit amount while on leave equal to 90% of the portion of the employee’s average weekly wage that is equal to or less than 50% of the state average weekly wage and 66% of the portion of the employee’s average weekly wage that is more than 50% of the state average weekly wage, all up to a maximum weekly benefit equal to the state average weekly wage.

Final Pay

State law in Maine requires household employers to pay their workers leaving employment in full no later than the next established payday. In addition, the law provides that “whenever the terms of employment or the employer’s established practice include provisions for paid vacations, vacation pay on cessation of employment has the same status as wages earned.”

Helpful Links for Nanny Taxes in Maine

Maine Department of Labor

Maine Revenue Services

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, which means they receive overtime pay of 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 $2,700 or more to any household employee in 2024 (or paid a domestic worker $2,600 or more in 2023), then you need to 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 can withhold from their wages or choose to pay it 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 the age of 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 six percent of cash wages on the first $7,000 you pay an employee.

Mileage Reimbursement

If your employee uses their own car in the course of their work, you can reimburse them for mileage. For 2024, the IRS has set the optional standard mileage rate at 67 cents per mile driven. Paying mileage is not mandatory or you can reimburse your employee at a different rate. However, if the cost of mileage causes your employee to fall below minimum wage, then you need to reimburse them for mileage.

GTM Can Help with Nanny Taxes in Maine

Call (800) 929-9213 for a free, no-obligation consultation with a household employment expert. We’ll answer all your questions and show you how to comply with wage, tax, and labor laws as a household employer. Or, if you’re ready to have GTM Payroll Services handle it all for you, get started with our nanny payroll and tax service.

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