Nanny Taxes in Pennsylvania

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 Pennsylvania.

Pennsylvania Minimum Wage

Household employees must be paid at least the highest of the federal, state, or applicable local minimum wage rates. Pennsylvania’s state minimum wage rate of $7.25/hour, which is the same as the federal rate, applies.

Overtime

Household employees in Pennsylvania 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.

Philadelphia Domestic Workers’ Bill of Rights

Household employers in Philadelphia are required to provide their workers with:

• Written contract governing:
  • a specific list of job duties
  • hourly wage and overtime wage
  • weekly schedule including the number of hours per week
  • the manner and frequency of payment
  • breaks for rest and meals
  • paid or unpaid leave including sick time
  • paid holidays
  • any other benefits provided
  • modes of transportation required and whether provided
  • value of housing if provided
  • sleeping period and personal time for live-in workers
  • term of the contract
  • any other terms and conditions as agreed upon by the domestic worker and the employer (provided that no provisions in the written agreement may waive a domestic worker’s rights under federal, state, or local law)
• An uninterrupted rest period of not less than 10 minutes for every four consecutive hours worked
• An uninterrupted 30-minute meal break after more than five consecutive hours worked.
• Paid and unpaid leave
• Two-week notification period before termination and a four-week notification period before termination for live-in domestic workers.

Learn more about Philadelphia’s Domestic Workers’ Bill of Rights and get resources from the city.

Pennsylvania State Unemployment Tax & Rate

In Pennsylvania, the new employer SUI (state unemployment insurance) rate is 3.822 percent on the first $10,000 of wages for each employee. Employers with previous employees may be subject to a different rate.

Pennsylvania is one of a few states that require employees to also pay into unemployment. Employees pay 0.07 percent of their total gross wages for unemployment. Employers are responsible for withholding employee contributions. Employee withholding is not limited to the taxable wage base. It applies to the total wages paid for the year.

Workers’ Compensation Insurance

Household employers in Pennsylvania 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.

Lehigh County Human Relations Ordinance

The Lehigh County Human Relations Ordinance (LCHRO) took effect on June 1, 2024, and applies to nearly all employers with at least one employee, including household employers. The LCHRO is intended to ensure equal opportunity concerning employment, housing, education, healthcare, and public accommodations without regard to actual or perceived protected characteristics. It prohibits discrimination in hiring and employment based on several protected characteristics, including race, sex, physical or mental disability, age, and height or weight.

The LCHRO also contains “ban-the-box” rules and a ban on salary history inquiries. “Ban-the-box” laws aim to give individuals with criminal records a fair chance when applying for a job.

Final Pay

All earned wages of a terminated household employee must be paid by the next regular payday, regardless if the termination is voluntary or involuntary.

Helpful Links for Nanny Taxes in Pennsylvania

Pennsylvania Department of Labor & Industry

Office of Unemployment Compensation

Domestic Worker Bill of Rights Resources

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 will pay 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 can withhold from their wages or choose to 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 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. This rate increases to 70 cents per mile on January 1, 2025. 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 Pennsylvania

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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