Nanny Taxes & Payroll in Montana

Minimum Wage

Household employees must be paid at least the highest applicable federal, state, or local minimum wage rate. Montana’s minimum wage rate of $10.85/hour applies.

Overtime Pay Rules

Household employees in Montana must 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 or when work is performed on a holiday.

State Unemployment Tax & Rate

In Montana, the new employer SUI (state unemployment insurance) rate is 2.00 percent on the first $47,300 of each employee’s wages. Employers with previous employees may be subject to a different rate. This is an employer-only tax.

Workers’ Compensation Insurance

Household employers in Montana 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.

Disability Benefits Insurance

Montana does not have disability benefits insurance requirements related to household employment.

Domestic Workers’ Bill of Rights

Montana does not have a domestic workers’ bill of rights.

Paid Leave Laws

Montana does not have paid leave requirements related to household employment.

Other State Regulations

At-Will Employment

Unlike other states, Montana is not an employment-at-will state. This means that after an initial probationary period (usually 12 months), employers must have “good cause” to terminate an employee rather than firing them for any reason. Under the Montana Wrongful Discharge from Employment Act (MWDEA), termination is restricted to valid job-related reasons, such as poor performance or misconduct, protecting workers from arbitrary dismissal.

The only time Montana employers can practice at-will employment (firing an employee at any time for any reason, or no reason at all, without notice, as long as the reason is not illegal) is during the employee’s probationary period, which generally cannot exceed 18 months from when the employee begins work. If an employer does not establish a specific probationary period or provides that there is none prior to or at the time of hire, there is a probationary period of 12 months from the date the employee begins work.

However, discharging an employee during his or her probationary period is an illegal act if the discharge is based on protected class reasons (illegal discrimination), violates company policies, or was in retaliation for the employee’s refusal to violate public policy or for reporting a violation of public policy.

If an employer maintains written internal procedures under which an employee may appeal a discharge within the employer’s organizational structure, the employer must provide the employee with written or electronic notice of these procedures within 14 days of the discharge.

Learn more about the Wrongful Discharge from Employment Act.

Final Paycheck

If a household employee resigns, their final paycheck must include all unpaid wages and must be paid on the next regular payday or within 15 days from the date of separation from employment, whichever occurs first.

If the employee is terminated for cause or laid off, all unpaid wages are due “immediately upon separation,” unless the family has a written policy that allows it to pay the final wages on their worker’s next regular payday for the pay period or within 15 days from separation, whichever occurs first.

Terminations

Notice of Reason for Termination
If an employee requests a reason for their termination, the employer must provide a full and succinct written explanation.

Letter of Discharge
Upon a discharged employee’s request, the employer must furnish the employee with a written statement of the reasons for the discharge.

Helpful Links for Nanny Taxes in Montana

• Montana Department of Labor & Industry
• Montana Department of Revenue

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, meaning they receive 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 $3,000 or more to any household employee in 2026 (or paid 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 may withhold from their wages or 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 6% of cash wages on the first $7,000 of wages paid to an employee.

Mileage Reimbursement

If your employee uses their own car in the course of their work, you can reimburse them for mileage. For 2026, the IRS has set the optional standard mileage rate at 72.5 cents per mile driven. Paying mileage is not mandatory in most states, and you can reimburse your employee at a different rate. However, if mileage costs cause your employee to fall below the minimum wage, you must reimburse them for mileage.

Remitting Taxes Quarterly

Household employers can remit taxes, including FICA, employee income, and federal unemployment, quarterly using Form 1040-ES. If a household employer does not remit their taxes quarterly, the entire amount will be due when they file their personal tax return. This could cause an underpayment penalty.

Year-End Requirements

By January 31, household employers must provide Form W-2 to their employees and submit Form W-3 and Copy A of Form W-2 to the Social Security Administration. Then, a household employer must file Schedule H with their personal tax return. Learn more: How to File Schedule H