Nanny Taxes in Maryland

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 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

In Maryland, the new employer SUI (state unemployment insurance) rate is 2.60 percent on the first $8,500 of wages for each employee. Employers with previous employees may be subject to a different rate. This is an employer-only tax.

Workers’ Compensation Insurance

Household employers in Maryland are required to 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.

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.

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 January 1, 2026.

FAMLI will be funded through a payroll tax that is scheduled to begin on October 1, 2024. Since only employers with 15 or more workers will need to contribute to paid leave, household employers likely will not need to pay this tax. However, all workers – no matter the size of the employer – will need to contribute through a payroll deduction.

Learn more about Maryland Family and Medical Leave.

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 one calendar year.

Pay Transparency

Maryland’s Wage History and Wage Range Law, which applies to all employers in the state regardless of size, requires a wage range to be provided to applicants upon request. Employers are restricted from asking about an applicant’s salary history during the hiring process. They are also not allowed to ask to retaliate or discriminate against an applicant who does not provide a wage history or requests a wage range from the employer. After extending a job offer, employers may inquire about a candidate’s wage history to support a higher wage offered by the employer and to verify this wage history with the applicant’s former employers.

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 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 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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