Nanny Taxes & Payroll in Vermont

Minimum Wage

Household employees must be paid at least the highest applicable federal, state, or local minimum wage rate. Vermont’s minimum wage rate of $14.42/hour applies.

Overtime Pay Rules

Household employees in Vermont 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 and or when work is performed on a holiday.

State Unemployment Tax & Rate

In Vermont, the new employer SUI (state unemployment insurance) rate for most employers is 1.00 percent on the first $15,400 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 Vermont 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

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

Domestic Workers’ Bill of Rights

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

Vermont Fair Employment Practices Act (FEPA)

Vermont’s discrimination prohibitions apply to all employers (including household employers) with one or more employees. FEPA makes it an “unlawful employment practice” for an employer to discriminate against a person based on:

• Age
• Ancestry
• Color
• Crime Victim status (not recognized for protection under federal law)
• Disability
• Gender Identity
• Health insurance coverage status (not recognized for protection under federal law)
• HIV+ Status
• National Origin
• Place of Birth
• Race
• Religion
• Sex
• Sexual Orientation
• Association with a member of a legally protected category listed above

These are considered “legally protected categories.”

In most instances, the Vermont Fair Employment Protection Act mirrors federal protections under Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, and other federal laws. However, Vermont law is broader than federal law and applies to all employers with one or more employees working in Vermont.

An employer includes individuals, partnerships, labor organizations, government bodies, associations and organizations, and other businesses and agents doing business in the state. Labor unions and employment agencies are also prohibited from discrimination under FEPA.

More information on Vermont’s Fair Employment Practices Act.

Paid Leave Laws

Voluntary Paid Family and Medical Leave Program

The Vermont Family and Medical Leave Insurance Plan (VT-FMLI), a voluntary paid family and medical leave program, will give workers access to paid family and medical leave insurance in 2025.

Household employers and household employees who work for Vermont families that do not offer VT-FMLI can choose from several plan design options to meet their workers’ needs and can purchase coverage through the VT-FMLI individual purchasing pool.

Under VT-FMLI, Vermont employees can receive 60 percent wage replacement for six weeks for qualifying events. Qualified events include:

• The birth of a child and care for the newborn child within one year of birth;
• An employee’s adoption of a child or foster care placement, and to care for the newly placed child within one year of placement;
• Caring for the employee’s spouse, child, stepchild, foster child, ward who lives with the employee, parent, or parent of the employee’s spouse who has a serious health condition;
• A serious health condition that makes the employee unable to perform the essential functions of their job; or
• Any qualifying exigency arising out of the fact that the employee’s spouse, child, or parent is a covered military member on “covered active duty,” or to care for a covered service member with a serious injury or illness if the eligible employee is the service member’s spouse, son, daughter, parent, or next of kin (i.e. “military caregiver leave”).

Learn more about Vermont’s Voluntary Family and Medical Leave Insurance.

Vermont Earned Sick Time Act

The Vermont Earned Sick Time Act requires household employers to provide eligible employees with paid sick time to use for their own health needs or to care for family members. The law applies to most employers with employees working in Vermont and is designed to give workers access to protected, job-secured time off.

Employee Eligibility

Employees are generally eligible if they work an average of at least 18 hours per week during a year. Both full-time and part-time employees may qualify, including household employees.

Sick Time Accrual

Eligible employees accrue sick time at a rate of 1 hour for every 52 hours worked, up to a maximum of 40 hours per year.

• Employers may frontload sick time at the beginning of the year instead of tracking accruals.
• Accrued but unused sick time must generally carry over from year to year, unless the employer frontloads the full annual amount.
• Employers may impose a waiting period of up to one year before new employees can use accrued sick time.

Critical Rules

• New employers are not subject to this law for one year after their first hire.
• Sick time can be used for the employee’s own illness or medical care, or to care for a covered family member.
• Employers cannot retaliate against employees for using earned sick time.
• Employers may require reasonable notice when the need for leave is foreseeable.
• Policies must meet or exceed legal requirements; existing PTO policies may qualify if they provide equivalent benefits and protections.

Learn more about Vermont’s Earned Sick Time Act.

Other State Regulations

Vermont has no other regulations related to household employment.

Helpful Links for Nanny Taxes in Vermont

• Vermont Department of Labor
• Vermont Department of Taxes

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