Nanny Taxes in New Mexico

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 New Mexico.

New Mexico Minimum Wage

Household employees must be paid at least the highest of the federal, state, or applicable local minimum wage rates. New Mexico’s state minimum wage of $12/hour applies. In Santa Fe (city and county), the local rate of $14.03/hour applies. In Las Cruces, the minimum wage rate is $12.36/hour.

Domestic Service in Minimum Wage Act

The Domestic Service in Minimum Wage Act ends the exemptions for household employees from New Mexico’s wage laws. Household employees in the state are now protected by New Mexico’s minimum wage standards and other wage protections. Learn more about New Mexico’s wage protections for household employees.

Overtime

Household employees in New Mexico 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.

New Mexico State Unemployment Tax & Rate

In New Mexico, the new employer SUI (state unemployment insurance) is based on the employer’s industry. The standard tax rate for new employers is 1.00 percent on the first $31,700 of wages for each employee. This rate will remain in effect for two years. Employers with previous employees may be subject to a different rate. This is an employer-only tax.

Workers’ Compensation Insurance

Household employers in New Mexico 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.

Healthy Workplaces Act

Under the state’s Healthy Workplaces Act, household employers must provide up to 64 hours of paid leave annually.

Workers must accrue at least one hour of paid leave for every 30 hours worked. Employers can choose to frontload 64 hours of paid leave on January 1 each year. Leave carries over from year to year, but can be capped at 64 hours annually.

Employees can take leave for reasons related to their and family members’ health and safety. All employees are eligible for leave, including part-time, seasonal, and temporary workers.

Employers with policies providing equivalent leave benefits as those required by the law will be deemed in compliance.

Employers must notify workers of their rights under the new law at the start of employment and on a poster displayed in the workplace. The state’s Department of Workforce Solutions will provide a model notice for this purpose.

Penalties for employer violations of the paid leave law include damages, back pay, reinstatement, and attorneys fees, among others.

Learn more about New Mexico’s Healthy Workplaces Act.

Final Pay

If a household worker is terminated by their employer, unpaid wages must be paid within five days of the termination. If an employee resigns, the final payment for wages must be paid by the next payday. If an employee’s final pay is not provided on time, they have a private right of action to recover damages.

Helpful Links for Nanny Taxes in New Mexico

New Mexico Department of Workforce Solutions

New Mexico Taxation & Revenue Department

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 New Mexico

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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