Nanny Taxes in New York
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 York.
New York Minimum Wage
Household employees like nannies and senior care companions must be paid at least the highest of the federal, state, or applicable local minimum wage rates.
New York has various minimum wage rates depending on the location of work.
In New York City, Long Island & Westchester County the rate is $15/hour, which will increase to $16/hour on January 1, 2024. In 2025, the rate increases to $16.50/hour and then to $17/hour in 2026.
For the rest of New York State, the minimum wage is $14.20/hour. This rate will increase to $15/hour on January 1, 2024. In 2025, the rate increases to $15.50/hour and then to $16/hour in 2026.
As of January 1, 2027, the minimum wage will be based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (“CPI-W”) for the Northeast Region.
Overtime Pay for Nannies in New York
Household employees in New York 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 when work is performed on a holiday. While federal law exempts live-in employees from overtime requirements, New York requires live-in household workers to be paid at least time and a half for hours worked over 44 in a week.
New York State Unemployment Tax & Rate
In New York, the new employer SUI (state unemployment insurance) rate is 4.025 percent, and the re-employment services fund (RSF) rate is .075 percent for a total obligation of 4.10 percent on the first $12,300 of an employee’s wages. Employers with previous employees may be subject to a different rate. This is an employer-only tax.
Workers’ Compensation Insurance for Household Employees
Household employers in New York are required to have workers’ compensation coverage for any employee working 40 hours or more per week. This applies to live-in and live-out employees. Get a quote on workers’ compensation insurance.
Disability Benefits Insurance
New York is one of five states that require household employers to make additional employee withholdings for disability benefits insurance. This program provides short-term benefits to employees who are unable to work due to a non-work-related illness or injury including pregnancy. Disability insurance may be purchased from any insurance company authorized to write disability benefits insurance in New York including the State Insurance Fund. You are authorized to collect from your employee, through a payroll deduction, a contribution of 0.5 – one percent of wages paid, but not in excess of 60 cents per week. You can also make this contribution on behalf of your employee.
Domestic Workers’ Bill of Rights
New York was the first state to pass a Domestic Workers’ Bill of Rights, which took effect on November 29, 2010. The law covers full-time workers including immigrants regardless of their immigration status. Relatives and casual workers like babysitters aren’t included.
Under New York’s Domestic Workers’ Bill of Rights, household employees must receive:
- An hourly pay rate of at least minimum wage
- Overtime pay of at least time-and-a-half for hours worked over 40 in a week (44 hours for live-in employees)
- Weekly pay
- At least three paid days off after one year of employment with the same employer if working 30 or more hours per week; two days of paid leave if working more than 20 hours per week, but less than 30 hours per week; and one day of paid leave if working less than 20 hours per week
- At least one day of rest per week. Employees can agree to work on their day of rest at an overtime pay rate. Employers are encouraged to coincide the rest day with the employee’s day of worship (if they have one)
- Written notice on work policies including sick leave, vacation, personal leave, holidays, hours of work, pay rate, overtime rate, and payday
The law also requires household employers to pay unemployment insurance, obtain workers’ compensation insurance, and acquire disability insurance.
Paid Sick Leave – New York State
Under New York State’s Paid Sick Leave Law, household workers employed in the state can use job-protected, paid, or unpaid sick leave for certain designated purposes beginning January 1, 2021. Families with between one and four employees must provide up to 40 hours of unpaid leave. Households with five or more employees are required to provide up to 40 hours of paid sick leave. Sick leave can be used for treatment, care, preventative care, and diagnosis of an employee’s or employee’s family member’s illness, injury, or health condition. Household employees accrue sick leave at a rate of at least one hour per 30 hours worked. Household employers now must provide a summary of the amounts of sick leave accrued and used in any calendar year within three business days of an employee’s request. Employers must also retain records of leave accrual and usage for each employee for six years.
Paid Family Leave – New York State
New York State employers – including household employers – are required to provide paid family leave (PFL) to their employees. Paid leave can be taken for various family or medical reasons including:
- Bond with a newborn, adopted, or foster-care child during the first 12 months after birth or placement
- Care for a seriously ill family member
- Address important needs related to a family member’s military service
Beginning January 1, 2023 employees will be permitted to take leave care for siblings with a serious health condition (including biological, adopted, step, and half-siblings).
Paid family leave is also available in some situations when an employee or their minor, dependent child is under an order of quarantine or isolation due to COVID-19.
Employees who work 20 or more hours a week and at least 30 days in a calendar year are covered. Full-time employees are eligible after 26 consecutive weeks of employment and part-time employees who work 20 hours or fewer per week are eligible after 175 working days (doesn’t need to be consecutive).
The program is paid for by employees through an additional payroll deduction. Or, as an employer, you can pay the cost on your employee’s behalf. The contribution rate is 0.455 percent. The annual maximum contribution is $399.43. Employees utilizing PFL benefits will receive 67 percent of their average weekly wage, up to a cap of 67 percent of the state’s average weekly wage (NYSAWW) of $1,688.19 meaning the maximum weekly benefit for 2023 will be $1,131.08. Employees earning less than the NYSAWW will contribute less than the annual cap of $399.43, consistent with their actual wages.
Beginning January 1, 2024, the employee contribution rate will be 0.373 percent of gross wages. The annual maximum contribution will be $333.25. Employees utilizing PFL benefits will continue to receive 67 percent of their average weekly wage, up to a cap of 67 percent of the New York State Average Weekly Wage (NYSAWW) of $1,718.15 meaning the maximum weekly benefit for 2024 will be $1,151.16. Employees earning less than the NYSAWW will contribute less than the annual cap of $333.25, consistent with their actual wages.
Paid Safe and Sick Leave – New York City
New York City’s Paid Safe and Sick Time Act (also referred to as the Earned Safe and Sick Time Act or ESSTA) requires household employers to:
- provide nannies, housekeepers, and other domestic workers with 40 hours of paid safe and sick leave at their “regular rate of pay”
- allow employees to use safe and sick leave as it is accrued;
- reimburse employees who must pay for required documentation after three consecutive workdays of leave;
- list on employees’ paystubs (or any document issued each pay period) the amounts of accrued and used sick and safe leave during the pay period, usage during the relevant pay period, and the total balance of accrued safe and sick leave
Household employees accrue paid sick and safe time at a rate of one hour for every 30 hours worked, up to 40 hours per year.
For ESSTA, a domestic worker is defined as an employee “who provides care for a child, companionship for a sick, convalescing or elderly person, housekeeping, or any other domestic service in a home or residence whenever such person is directly and solely employed to provide such service by an individual or private household” but not a person who is employed by an agency.
Household employees can use ESSTA for
- their own mental or physical illness, injury, or health condition, need for medical diagnosis, care, or treatment of a mental or physical illness, injury, or health condition, or need for preventive medical care
- the care of a family member with a mental or physical illness, injury, or health condition, who needs medical diagnosis, care, or treatment of a mental or physical illness, injury, or health condition, or who needs preventive medical care
- certain absences from work when the employee or employee’s covered family member has been the victim of domestic violence, a family offense, sexual offense, stalking, or human trafficking
- absences due to the closure of the employee’s place of business or the employee’s child’s school or childcare provider that has been closed by order of a public official due to a public health emergency.
Leave must be paid at the employee’s regular rate. Only hours worked in New York City count toward the accrual of ESSTA leave.
An employee who primarily works in another state, such as Connecticut or New Jersey, is also covered by ESSTA, so long as they “regularly perform, or are expected to regularly perform, work in New York City during a calendar year.” In this situation, only the hours worked in New York City will count for accrual purposes.
Employers that fail to adhere to the ESSTA will incur fines. If an employer is found in violation, every employee is entitled to $500 per calendar year that the violating policy or practice was in effect.
13-Hour Rule in NY
A household employee who is asked to work a 24-hour shift only needs to be paid for 13 of those hours as long as they are provided with eight hours for sleep and three hours for meal breaks. If the employee’s meal breaks are interrupted or if they do not get five uninterrupted hours of sleep, they must be paid for the entire break. An example where this rule would be in effect is for live-in nannies and senior care workers who are asked to stay overnight.
Sexual Harassment Prevention Training
Employers in New York State – including household employers – must provide annual sexual harassment prevention training for their employees and are required to establish a sexual harassment prevention policy.
New York State provides a model sexual harassment prevention policy that employers can adopt as their own.
Domestic Violence Victim Leave
New York employers must grant leave for domestic violence victims. You must provide a reasonable amount of leave to:
- Seek medical attention for injuries caused by domestic violence (including for a child victim);
- Obtain services from a domestic violence shelter, program, or rape crisis center as a result of domestic violence;
- Obtain psychological counseling related to an incident of domestic violence (including for a child victim);
- Participate in safety planning and take other actions to increase safety from future incidents of domestic violence, including temporary or permanent relocation; or
- Obtain legal services, assist in the prosecution of the offense, or appear in court in relation to the incident of domestic violence.
An exception will be granted if you can show the leave will cause you undue hardship. Employees may need to provide advance notice of the leave or documentation of the leave when it is not foreseeable.
Failure to provide the leave as required will constitute an unlawful discriminatory practice and you could be subject to civil fines and penalties of up to $50,000, or $100,000 if the violation is found to be willful, wanton, or malicious. Victims may also be awarded back pay and damages. Employers must maintain the confidentiality of any information about an employee’s status as a victim of domestic violence, to the extent allowed by law.
New York State Human Rights Law
The state’s Human Rights Law (HRL) has expanded protections to individuals employed as domestic workers. Previously, domestic workers were only covered by the Human Rights Law’s antidiscrimination protections in certain circumstances. Now, domestic workers are considered “employees” for all purposes under the Human Rights Law and have the full protections of the HRL’s employment provisions. A person does not need to live with their employer to be considered a domestic worker. Additionally, the law does not cover any individual employed by their parents, spouse, or child.
Employers are prohibited from discriminating against domestic workers due to age, race, creed, color, national origin, sexual orientation, gender identity or expression, military status, sex, disability, predisposing genetic characteristics, familial status, marital status, domestic violence victim status, favorably resolved arrest record, or because the individual has opposed any practices forbidden under the HRL or because the individual has filed a complaint.
In some situations, the employee’s sex might be considered a bona fide occupational qualification. If something is a bona fide occupational qualification, it means it is essential to performing a job.
Stop Credit Discrimination in Employment Act
As part of the NYC Human Rights Law (NYCHRL), the Stop Credit Discrimination in Employment Act prohibits household employers in New York City from checking applicants’ credit history to make employment decisions.
Household employers cannot ask job seekers or current employees about their credit history, which includes credit worthiness, credit capacity, and payment history. They cannot request a credit report or ask about credit accounts, charged-off debts, items in collections, bankruptcies, judgments, and liens. It is against the law to ask questions about home foreclosure and information about credit card debt, child support, and student loans. Credit history cannot be used to decide whether to hire, fire, or promote an individual.
Wage Theft Accountability Act
Under this act, “wage theft” is considered “larceny.” It states “a person obtains property by wage theft when he or she hires a person to perform services and the person performs such services and the person does not pay wages, at the minimum wage rate and overtime, or promised wage, if greater than the minimum wage rate and overtime, to said person for work performed.”
New York Final Pay
If a nanny or household employee voluntarily leaves their job or is terminated, the family must pay the worker’s wages no later than the regular payday for the pay period during which termination occurred. An employee can request that their wages be paid by mail.
Helpful Links for Nanny Taxes in New York
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.
Social Security and Medicare taxes are commonly referred to as FICA taxes. If you pay cash wages of $2,600 or more to any household employee in 2023 (will pay a domestic worker $2,700 or more in 2024), 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.
If your employee uses their own car in the course of their work, you can reimburse them for mileage. For 2023, the IRS has set the optional standard mileage rate at 65.5 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 York
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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