Nanny Taxes in Minnesota

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 Minnesota.

Minnesota Minimum Wage

Household employees must be paid at least the highest of the federal, state, or applicable local minimum wage rates. Minnesota’s state minimum wage of $8.85/hour for small employers – including households – applies, and will also be the rate for training wages (for employees younger than 20 years of age for the first 90 consecutive days of employment); and youth wages (for employees younger than 18 years of age).

In Minneapolis, the current local minimum wage rate is $14.50/hour for employers with fewer than 100 employees. The city’s rate increases to $15.57/hour on July 1, 2024.

In St. Paul, the current local minimum wage rate is $11.50/hour for employers with five or fewer employees. The city’s rate increases to $12.25/hour on July 1, 2024.

Overtime

Household employees in Minnesota 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 until they reach 48 hours in a workweek.

Minnesota State Unemployment Tax & Rate

In Minnesota, the new employer SUI (state unemployment insurance) rate is 1.00 percent on the first $42,000 of wages for each employee. Employers with previous employees may be subject to a different rate. This is an employer-only tax.

Minnesota Earned Sick and Safe Time

Effective January 1, 2024, Minnesota’s earned sick and safe time law requires employers, including household employers, to provide paid leave to employees who work in the state.

Sick and safe time is paid leave that employees in Minnesota can use for certain reasons, including when they are sick, to care for a sick family member, or to seek assistance if they or a family member have experienced domestic abuse.

A household employee is eligible for sick and safe time if they work at least 80 hours in a year for a family in Minnesota and are not an independent contractor. Temporary and part-time household employees are eligible for sick and safe time.

An employee earns one hour of sick and safe time for every 30 hours worked and can earn a maximum of 48 hours each year unless the employer agrees to a higher amount.

Employees can use their earned sick and safe time for any of the following reasons:

• the employee’s mental or physical illness, treatment, or preventive care;
• a family member’s mental or physical illness, treatment, or preventive care;
• absence due to domestic abuse, sexual assault, or stalking of the employee or a family member;
• closure of the employee’s workplace due to weather or public emergency or closure of a family member’s school or care facility due to weather or public emergency; and
• when determined by a health authority or health care professional that the employee or family member is at risk of infecting others with a communicable disease.

Employees may use earned sick and safe time for the following family members:

• child, including a foster child, adult child, legal ward, a child for whom the employee is legal guardian, or child to whom the employee stands or stood in loco parentis (in place of a parent);
• spouse or registered domestic partner;
• sibling, stepsibling or foster sibling;
• biological, adoptive or foster parent, stepparent or a person who stood in loco parentis (in place of a parent) when the employee was a minor child;
• grandchild, foster grandchild or step-grandchild;
• grandparent or step-grandparent;
• a child of a sibling of the employee;
• a sibling of the parents of the employee;
• a child-in-law or sibling-in-law;
• any of the family members listed in 1 through 9 above of an employee’s spouse or registered domestic partner;
• any other individual related by blood or whose close association with the employee is the equivalent of a family relationship; and
• up to one individual annually designated by the employee.

Household employers are also required to:

• include the total number of earned sick and safe time hours accrued and available for use, as well as the total number of earned sick and safe time hours used, on earnings statements provided to employees at the end of each pay period; and
• provide employees with a notice by January 1, 2024 — or at the start of employment, whichever is later — in English and in an employee’s primary language if that is not English, informing them about earned sick and safe time; and
• include a sick and safe time notice in the employee handbook, if the employer has an employee handbook.

The Minnesota Department of Labor and Industry has prepared a uniform employee notice for earned sick and safe time that employers must provide to each employee, in the employee’s primary language, by January 1, 2024, or at the start of the employment if it is after that date.

Earned sick and safe time local ordinances already exist in the cities of Bloomington, Duluth, Minneapolis, and St. Paul, Minnesota. Household employers in those cities will need to meet the most generous leave provisions and other protections of the applicable laws.

Minnesota Paid Family and Medical Leave

Minnesota’s paid family and medical leave (PFML) will provide workers, including household employees, with up to 20 weeks of paid, job-protected leave for family and medical reasons.

Employer and employee contributions begin Jan. 1, 2026, the same date benefits become available.

After 90 days of employment, all employees, except seasonal employees and independent contractors, are eligible to participate in tPFML. The amount of benefits available is based upon a progression scale with lower-income workers receiving a higher percentage of their wages while on leave and higher-income workers receiving less of their wages.

PFML may be used for:

• a serious health condition
• a qualifying exigency
• safety leave
• family care
• new child bonding or medical care related to pregnancy.

Qualifying events must last at least seven calendar days, except for child-bonding leave.

Employees are eligible to receive up to 12 weeks of paid leave for serious health conditions or pregnancy, and 12 weeks of paid leave for bonding, safety leave, and family leave. However, the leave is capped at 20 weeks in a single benefit year.

PFML provides partial wage compensation based on income, capped at the state’s average weekly wage.

Employers and employees fund PFML equally through quarterly payroll contributions remitted to the state by employers beginning Jan. 1, 2026. The contribution rate is adjusted annually, starting at 0.7% of wages in 2026. Employers with fewer than 30 workers receive a discount on contributions according to a formula in the law.

Starting in mid- to late 2024, employers must begin submitting quarterly wage reports to the state for PFML purposes.

Bloomington Earned Sick and Safe Leave Ordinance

An earned sick and safe leave ordinance for workers in Bloomington businesses went into effect on July 1, 2023. Employees will accrue a minimum of one hour of sick and safe leave for every 30 hours worked up to a maximum of 48 hours in a calendar year. For employers with six or more workers, it would be paid time off. For employers with five or fewer workers, it would be unpaid time off.

An employee may use their accrued sick and safe time for their own mental or physical illness, injury, or health condition; to care for a family member with a mental or physical illness, injury, or health condition; and absences due to domestic abuse, sexual assault, or stalking of the employee or employee’s family member among other reasons.

An employer may satisfy the earned leave requirement by providing at least 48 hours of sick and safe time following the initial 90 days of employment for use by the employee during the first calendar year and providing at least 80 hours of sick and safe time beginning each subsequent calendar year.

Beginning on January 1, 2024, Bloomington will expand the meaning of a “family member” to match the definition under the state’s Earned Safe and Sick Time. A family member will include any “individual related by blood or whose close association with the employee is the equivalent of a family relationship, and up to one individual annually designated by the employee.” Bloomington also revised the reasons an employee may use leave to match the list in the state law. Bloomington’s permitted reasons for leave no longer include the death of a family member. However, employees will be able to take leave when determined by a healthcare professional or authority that an employee or their family member is at risk of infecting others with a communicable disease.

Also starting in 2024, employers will be able to provide employees a lump sum of leave hours at the start of their employment instead of using the accrual method. However, employers who frontload leave hours must make them available for immediate use. Employers will also be able to require reasonable documentation to substantiate the reason for leave when the employee uses earned sick and safe time for more than three consecutive days.

Read more about Bloomington Earned Sick and Safe Leave.

Minneapolis Sick and Safe Time

Minneapolis requires employers in the city to provide some access to leave. Employers with six or more workers must provide paid sick and safe time. Employers with five or fewer workers must also provide sick and safe time but can choose to provide it unpaid.

Coverage includes illness or injury, medical treatment or preventative care (including vaccines), domestic or sexual assault, and care of a family member.​ All types of employees – including part-time, temporary, or undocumented – are included.

Employees accrue sick and safe time at the rate of one hour for every 30 hours worked in the city.

Accrued and unused hours do not expire at the end of the benefit year (unless an employer chooses to front-load sick and safe time hours). Employers may set a cap on each employee’s accrual. Employers must allow each employee to accrue at least 48 hours per year, carried over from year to year until an 80-hour maximum accrual cap is reached.

Read more about Minneapolis Sick and Safe Time.

Saint Paul Earned Sick and Safe Time

All Saint Paul employers with employees working in Saint Paul must provide Earned Sick and Safe Time (ESST) to their employees.

ESST can be used for an employee’s absence from work due to illness, medical appointments, or critical safety issues, including domestic violence, sexual assault, or stalking.

The definition of an employee is any person employed by an employer, including temporary and part-time employees, who performs work for at least 80 hours in a year for that employer in Minnesota. A “family member” includes an employee’s relative, the relative of their spouse or registered domestic partner, any other individual with a close relation with the employee, and up to one individual annually designated by the employee.

Employees accrue one hour of ESST for every 30 hours worked. They can begin accruing ESST on their employment start date.

Employees can accrue up to 80 hours in one year unless their employer opts to give them more ESST.

If an employer has a PTO policy in place that meets the minimum requirements of the Ordinance, the PTO policy is sufficient and the employer does not need to provide additional ESST.

An employee can use ESST for leave related to making their home safer, along with relocating, as a result of domestic abuse, sexual assault, or stalking.

Employees can also take leave when a healthcare professional or authority determines an employee or their family member is at risk of infecting others with a communicable disease.

Employers must provide notice of ESST to all employees and the notice must be in the employee’s primary language. Employers will also need to provide an earnings statement at the end of each pay period showing the ESST amounts accrued, used, and available during the pay period.

Read more about Saint Paul Earned Safe and Sick Time.

Workers’ Compensation Insurance

Household employers in Minnesota are required to have a workers’ compensation policy for any household worker that earns more than $1,000 in any quarter. Get a quote on workers’ compensation insurance.

Helpful Links for Nanny Taxes in Minnesota

Minnesota Department of Revenue – Household Employees Withholding Fact Sheet 7

Minnesota Department of Labor and Industry

Minnesota Department of Commerce

 

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 Minnesota

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.

Download The Complete Guide to Household Payroll

Get our complimentary guide and learn everything you need to know about paying your employees legally and filing your taxes the right way.