Nanny Tax Threshold Increases for 2018

The nanny tax threshold will be $2,100 beginning in 2018.

The Social Security Administration recently released its employment coverage thresholds for 2018.

If a household worker, such as a nanny or housekeeper, earns $2,100 or more in cash wages in 2018, Social Security and Medicare taxes, commonly referred to as “nanny taxes,” must be paid by the family and the employee.

The employment coverage threshold for domestic employees is adjusted periodically for inflation and is up from $2,000 in 2017.

The nanny tax threshold does not apply to wages paid to a spouse, a child under age 21, parent, or any employee under the age of 18.

Social Security and Medicare taxes are 15.3% of cash wages. The employer pays 7.65% (Social Security at 6.2% and Medicare at 1.45%) while the same amount can be withheld from the employee’s pay or the employer can pay their worker’s share and not withhold.

To understand your total nanny tax, wage, and payroll responsibilities, download The Complete Guide to Household Payroll.

For more information on the nanny tax threshold, visit Employment Coverage Thresholds on the Social Security Administration website.