Nanny Taxes in Michigan

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 Michigan.

Michigan Minimum Wage

Household employees must be paid at least the highest of the federal, state, or applicable local minimum wage rates. Michigan’s state minimum wage of $10.33/hour applies.

Overtime

Household employees in Michigan are required to be paid at least time and a half for hours worked over 40 in a seven-day workweek. Overtime pay is not required for live-in employees.

Michigan State Unemployment Tax & Rate

In Michigan, the new employer SUI (state unemployment insurance) rate is 2.70 percent on the first $9,500 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 Michigan are required to have a workers’ compensation policy for any employee except those employed for less than 35 hours per week for 13 weeks or longer during the preceding 52 weeks. Get a quote on workers’ compensation insurance.

Final Pay

When a family terminates an employee or the worker voluntarily resigns, they must pay the worker all wages due by the regularly scheduled payday for the period in which the termination or resignation occurs.

Helpful Links for Nanny Taxes in Michigan

Michigan Wage & Hour Division

Michigan Department of Insurance and Financial 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 Michigan

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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