Nanny Taxes in Maryland

Household employers must comply with tax, wage, and labor laws affecting 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 Maryland.

Maryland Minimum Wage

Household employees must be paid at least the highest of the federal, state, or applicable local minimum wage rates. Maryland’s state minimum wage of $15/hour applies to all employers, regardless of size.

In Montgomery County, the minimum wage is $15/hour. Employees aged 18 and under who work less than 20 hours per week are exempt from this rate but must be paid at least 85 percent of the state minimum wage rate.

In Howard County, the minimum wage is $15/hour for employers with 14 or fewer workers. The rate will increase to $15.50/hour on January 1, 2026, and then to $16/hour by July 1, 2026.

Overtime

Household employees in Maryland 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 hours worked in excess of eight hours in a day, during weekends, or on holidays. Live-in employees are not excluded from Maryland’s overtime laws.

Maryland State Unemployment Tax & Rate

Maryland’s new employer SUI (state unemployment insurance) rate is 2.60 percent on each employee’s first $8,500 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 Maryland must have a workers’ compensation policy for any household employee whose earnings are $1,000 or more in any calendar quarter from a private household. Household employers and their workers may jointly elect for coverage, even if the employee doesn’t meet the earnings requirement. Get a quote on workers’ compensation insurance.

Domestic Workers Law (Montgomery County)

Montgomery County’s Domestic Workers law requires employers to present a written contract to household employees and offer to negotiate employment terms. A household employee can voluntarily agree to work without a contract only if the employer and employee sign a disclosure statement. The contract must include:

• Work Schedule (days/hours)
• Duties
• Whether an employer can require workers to perform additional duties
• Wages
• How often worker will be paid
• Deductions
• Overtime pay
• Sick Leave
• Vacation Time
• Holidays
• Living accommodations to be provided (if a live-in employee)
• Deductions for food and lodging, if any
• Severance pay, if any
• Notice required before termination of the contract
• Length of the contract
• Reimbursement for work-related expenses
• Notice of employment rights under Maryland law

Download a model contract

More information on the Domestic Workers law.

Maryland Family and Medical Leave

Maryland has established a Family and Medical Leave Insurance Program (FAMLI) that covers just about all employers and full- and part-time workers in the state, including household employers and their workers.

Household employees who have worked at least 680 hours over the 12-month period immediately preceding the start date of their leave will have up to 12 weeks of paid family and medical annually for qualified reasons with the possibility of an additional 12 weeks of paid parental leave.

Qualified reasons include:

• caring for or bonding with a newborn child or child newly placed for adoption, foster care, or kinship care
• caring for a family member with a serious health condition
• attending to the employee’s own serious health condition
• caring for a next of kin military service member with a serious health condition resulting from military service
• attending to “qualifying exigencies” arising from a family member’s deployment to military service

Workers can receive up to 90 percent of their weekly wages in benefits up to $1,000/week. Lower-income employees will receive a greater percentage of their wages than higher earners. Paid leave benefits will be paid directly by the state to eligible employees.

Benefits will be available beginning July 1, 2026.

FAMLI will be funded through a payroll tax that began on July 1, 2025. The secretary of labor will set the contribution rate by February 1, 2025.

Before the delay, the contribution rate had been set at 0.90% of an employee’s covered wages up to the Social Security taxable wage base (currently set at $168,600 and going up to $176,100 in 2025). This contribution was to be divided equally between employees and employers (with each paying 0.45%). Since only employers with 15 or more workers were to contribute to paid leave, household employers likely would not have had to pay this tax. However, all workers – no matter the employer’s size – would have needed to contribute (0.45% of wages) through a payroll deduction. An employer could have voluntarily elected to pay their employee’s contribution.

Learn more about Maryland Family and Medical Leave.

Employer info on FAMLI

Montgomery County Paid Sick Leave

Household employers in Montgomery County with fewer than five workers must provide each employee with both paid and unpaid sick and safe leave. Leave accrues at a rate of one hour of paid time for every 30 hours of work performed within the county. Each employee can accrue up to 32 hours of paid leave and 24 hours of unpaid leave in a calendar year. Employees can use up to 80 hours of earned sick and safe leave in any calendar year.

Pay Transparency

Maryland’s Equal Pay for Equal Work – Wage Range Transparency law, which was greatly expanded on October 1, 2024, requires employers to provide information about compensation and benefits in their job postings, including:

• pay range, with the minimum and maximum wage
• general description of benefits
• any other compensation elements offered for the position

The requirements apply to any public posting for a position for work that will be physically performed, at least in part, in Maryland. A “posting” under this law is defined as “a solicitation intended to recruit applicants for a specific available position.” Even if an  employer doesn’t create a posting for an available position, they must still disclose the same information required on postings “before a discussion of compensation is held with the applicant; and at any other time on request of the applicant.”

Sample Compensation Disclosure Form

Employers are prohibited from refusing to interview, hire, or employ an applicant for requesting a wage range, refusing to provide their wage history, or exercising any other rights under the law.

Employers must also keep a record of their compliance with the new pay disclosure requirements for each position for at least three years after the position is filled; or if the position is not filled, three years from when it was initially posted.

Learn more about Equal Work for Equal Pay.

Pay Stub and Pay Statement Law

The state’s Pay Stub and Pay Statement law, effective October 1, 2024, requires employers to provide workers with pay stubs or online pay statements that include:

• Employer’s name, address, and phone number
• Date of payment and the beginning and end dates of the pay period
• Number of hours worked during the pay period
• Pay rate
• Gross and net pay earnings during the pay period
• Amount and names of all deductions

At the time of hire, Maryland employers must provide written notices of pay rate, regular paydays, and leave benefits.

Learn more about the Pay Stub and Pay Statement Law.

Final Pay

Upon termination, household employees must be paid all wages due on or before what would have been their next regular payday. Accrued and unused vacation or PTO must be paid unless the family has a policy that specifically states it will not be paid out.

Helpful Links for Nanny Taxes in Maryland

Maryland Department of Labor, Licensing & Regulation

Comptroller of Maryland

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 will pay 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 can withhold from their wages or choose to 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 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. This rate increases to 70 cents per mile on January 1, 2025. 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 Maryland

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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