Nanny Taxes in Massachusetts

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 Massachusetts.

Massachusetts Minimum Wage

Household employees must be paid at least the highest of the federal, state, or applicable local minimum wage rates. Massachusetts’ state minimum wage of $15/hour applies.

Overtime

Household employees in Massachusetts are required to be paid at least time and a half for hours worked over 40 in a seven-day workweek.

Massachusetts State Unemployment Tax & Rate

In Massachusetts, the new employer SUI (state unemployment insurance) rate is 1.45 percent on the first $15,000 in wages. Employers with previous employees may be subject to a different rate. This is an employer-only tax.

Workers’ Compensation Insurance

In Massachusetts, if your household employee works at least 16 hours per week, you need to carry workers’ compensation insurance. Get a quote on workers’ compensation insurance.

Domestic Workers’ Bill of Rights

Massachusetts was one of the first states to pass a Domestic Workers’ Bill of Rights. The law provides clear guidelines for household employers and their workers.

Under Massachusetts’ Domestic Workers’ Bill of Rights, household employees must receive:

• Pay for all working time when required to be on their employer’s premises or on duty
• At least 24 consecutive hours of rest per week if they work at least 40 hours/week
• Overtime pay of at least time and a half for hours worked over 40 in a week or if they work on their day of rest
• Eight weeks of parental leave for the birth or adoption of a child
• A written employment agreement that includes their rate of pay, overtime pay rate, working hours, days of rest, sick days, vacation days, holidays, health insurance, severance, other benefits, job responsibilities, the process for addressing grievances, right to workers’ compensation, and required notice for termination by the employer.
• A written evaluation, if requested, after three months of employment and then annually thereafter
• Protection against retaliation (can’t be fired or discriminated against when seeking fair wages and overtime)
• If an employee works more than 16 hours per week, they must be given a timesheet every two weeks that shows the number of hours worked each day
• 30-minute meal or rest break each workday if an employee works six or more hours in a day

Also, a household employer must keep all notices, payroll records, and work agreements for at least three years.

Paid Family and Medical Leave (PFML)

Massachusetts PFML provides temporary income replacement to household employees who are welcoming a new child into their family, are struck by a serious illness or injury, need to take care of an ill or ailing relative, and for certain military considerations. Employees may take 12 to 26 weeks of job-protected paid leave.

The 2024 contribution rate is 0.88 percent of employee wages. Since families with household help likely have fewer than 25 employees, they aren’t required to contribute to the program. However, they must still withhold and remit the employee portion of 0.46 percent of gross wages (0.18 percent for family leave and 0.28 for medical leave). Employers with 25 or more workers are required to contribute the remaining 0.42 percent. A family could elect to cover some or all of their employee’s contribution. Learn more about rates or use the PFML Contribution Calculator.

Families are responsible for sending PFML contributions to the Department of Family and Medical Leave on behalf of their employees. The maximum weekly PFML benefits a worker can receive in 2024 is $1,144.90. Employees also have the option to “top off” their PFML wage replacement benefits with any other accrued paid leave (such as PTO, sick time, vacation, or personal time) to receive up to 100 percent of their wages during their PFML-qualified leave.

Employers are required to provide notice of these changes to their employees.

Required workplace poster

GTM Payroll Services can manage Paid Family and Medical Leave payroll deductions for household employers. Call (800) 929-9213 to get started.

Learn more about Massachusetts Paid Family and Medical Leave.

Final Pay

If a family terminates their household employee, the worker must be paid all wages due (including accrued vacation pay) on the termination date. If the employee resigns, payment can be made on the next regular payday. There are mandatory treble damages for any violations.

Helpful Links for Nanny Taxes in Massachusetts

Massachusetts Executive Office of Labor and Workforce Development

Massachusetts Department of Revenue

Tax Guide for Household Employers

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 Massachusetts

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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