Nanny Taxes in Virginia

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 Virginia.

Virginia Minimum Wage

Household employees must be paid at least the highest of the federal, state, or applicable local minimum wage rates. In Virginia, the state’s minimum wage rate of $12/hour applies. Rate increases to $13.50/hour in 2025 and $15/hour in 2026 will be contingent on the General Assembly’s enactment by July 1, 2024. The state’s new minimum wage law removes exempt status from several categories of employees including home care providers and domestic service workers.

Overtime

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

Virginia State Unemployment Tax & Rate

In Virginia, the new employer SUI (state unemployment insurance) rate is 2.50 percent on the first $8,000 of wages for each employee. Employers with previous employees may be subject to a different rate. This is an employer-only tax.

Workers’ Compensation Insurance

Household employers in Virginia are not required to have workers’ compensation coverage if they have fewer than three employees. However, you can choose a voluntary policy to protect both you and your employees. Get a quote on workers’ compensation insurance.

Domestic Worker Bill of Rights

Virginia’s Domestic Worker Bill of Rights provides domestic workers with workplace protections including:

• Unlawful employment practice to fail or refuse to hire, discharge, or discriminate against any individual for the following reasons: compensation, race, color, religion, sex, sexual orientation, gender identity, marital status, pregnancy, childbirth, or related medical conditions, age, veteran status, or national origin.
• Salaried employees are to be paid at least once a month; hourly workers are to be paid at least every two weeks or twice each month.

Employee protection laws have also been extended to include domestic workers like nannies, senior caregivers, housekeepers, and estate staff. They are now allowed to file complaints regarding workplace safety, which will be investigated by the state’s Commission of Labor and Industry.

Final Pay

Terminated household employees are entitled to payment of their wages on or before the next regular payday.

Helpful Links for Nanny Taxes in Virginia

Virginia Department of Labor

Virginia Office of Finance

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 Virginia

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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