The True Cost of a Nanny in 2026: Full-Year, All-In Math

Last updated September 28, 2026

General information, not advice: this page covers tax and employment topics in general terms. It is not tax or legal advice, and reading it does not create a CPA–client relationship. Tax and labor rules vary by state and situation — consult a qualified professional for your circumstances.

“$25 an hour” sounds like $52,000 a year. It isn’t — at least not to you. Between employer payroll taxes, workers’ compensation, and the payroll service that keeps you compliant, a full-time nanny costs roughly 10% more than the wage number on the job posting. This guide builds the full-year model line by line so you can budget honestly, then shows how the number moves at $20, $30, and $35 an hour.

All tax figures below are 2026 figures (IRS Topic 756 / Publication 926). State unemployment and workers’ comp figures are labeled examples — check your state.

The headline number

At $25/hr × 40 hrs/week × 52 weeks:

The markup over wages: $5,264.50 ÷ $52,000 = 10.1%.

Want the reverse problem — “I want my nanny to take home $1,000 a week, what does that cost me?” — run the numbers in our gross-up calculator, which handles employer-paid FICA and every line of math.

Line by line

Gross wages: $52,000. $25 × 40 hours × 52 weeks. If you hire mid-year or the nanny takes unpaid time, prorate. Most families put full-time nannies on salary with guaranteed hours — see below — so treat 52 weeks as the default.

Employer FICA: $3,978. You owe 7.65% of cash wages as the employer’s share of Social Security and Medicare (6.2% Social Security up to the 2026 wage base of $184,500, plus 1.45% Medicare with no cap). The employee owes an identical 7.65%, normally withheld from their pay. So the combined FICA on a nanny’s wages is 15.3% — split evenly unless you agree to pay the employee’s share too, in which case the math changes because employer-paid FICA is itself taxable wages for income tax purposes.

FUTA: $42. Federal unemployment tax is 6% on the first $7,000 of each employee’s wages, reduced to an effective 0.6% when you pay your state unemployment tax on time — which you will, because your payroll service handles it. 0.6% × $7,000 = $42. (You owe FUTA at all once you’ve paid $1,000+ in total household wages in any calendar quarter.)

State unemployment (example): $256.50. This is the one line that varies most. States set their own new-employer rates (commonly 2–3%) and wage bases ($7,000–$15,000+). The example above uses 2.7% on a $9,500 wage base = $256.50. Look up your state’s new-employer rate when budgeting; a payroll service files these quarterly reports for you.

Workers’ comp (example): $400. Homeowners insurance does not cover a nanny injured on the job — you need a workers’ comp policy, and most states require it (see our state-by-state summary). Reported costs for household employers typically land in the $200–$800/year range depending on state and payroll. The example uses $400; treat it as a placeholder until you get a quote.

Payroll service: $588. $49/month × 12 — Poppins’s published 2026 price. The cheaper the service, the more of the quarterly state filings you should confirm it actually handles (see our payroll service comparison). Think of this as compliance insurance, not a convenience fee.

Background check: $60–$150, one-time. A real vetting stack (not just a platform checkbox) runs roughly this much in year one. Don’t amortize it into the annual number — just know year one is slightly higher.

Guaranteed hours: why PTO is already inside the $52,000

Full-time nannies are usually paid a salary with guaranteed hours: you pay the same $1,000/week whether you need them 40 hours, go on vacation for a week, or leave early on a holiday. That’s the industry norm, and it’s why PTO doesn’t add a separate line to the model — the 2–3 weeks of paid time off, holidays, and your family’s vacation weeks are all already inside the $52,000.

If you hire hourly with unpaid time off instead, the wage line shrinks (e.g., 50 paid weeks instead of 52: $25 × 40 × 50 = $50,000) — but expect the hourly rate to be higher, since the nanny is absorbing the income risk.

Sensitivity table: $20 to $35 an hour

Same model, same example assumptions for SUTA/workers’ comp/payroll (those are largely fixed costs, so the markup percentage actually falls as wages rise):

(Totals include $42 FUTA, $256.50 example SUTA, $400 example workers’ comp, and $588 payroll service.)

Two takeaways. First, the “$10,000 raise” from $25 to $30/hr actually costs you about $11,200 — always apply the ~10% multiplier when comparing candidates. Second, the fixed-cost items (payroll service, workers’ comp) mean a cheaper nanny carries a slightly higher percentage markup — not a reason to overpay, just a reason to model rather than multiply.

The costs people forget

• Overtime. Over 40 hours/week costs 1.5× the regular rate under federal law (details and state overlays). Five extra hours a week at $25/hr adds ~$9,750/year. Build a hard 40-hour schedule or budget the OT honestly.
• Backup care. When your nanny is sick or on PTO, you still need coverage. A few backup-care days a year at $20–25/hr adds up fast.
• Annual raises. Budget 3–5% a year if you want to keep a good nanny. On $52,000, that’s $1,560–$2,600 in year two, plus the 10% tax markup on the raise.
• Year-one setup. EIN (free from the IRS — never pay a filing service), state employer registration, and the work agreement all cost time, not money, unless you pay a payroll service to handle onboarding (most do).

What to do with this number

1. Budget the all-in figure, not the wage. If $57,265 is more than you can spend, negotiate the wage down before hiring — it’s much harder after.
2. Decide the FICA question now. Will you withhold the employee’s 7.65% from their pay (standard), or pay it yourself as a perk? If you pay it, the gross-up calculator shows the true cost — the Topic 756 rule makes employer-paid FICA taxable wages for income tax.
3. Pick a payroll service or commit to DIY. The $588 line is optional only if you’ll file Schedule H and quarterly state reports yourself (here’s the DIY path).
4. Sanity-check against alternatives. Run your numbers through the nanny vs. daycare vs. au pair comparator before you commit — the all-in nanny number changes the comparison more than most families expect.

When the model breaks: part-year hires and mid-year raises

The $57,264.50 figure assumes a full 52-week year. Reality is messier:

Hiring mid-year. Start in July? Halve the wage line ($26,000 for 26 weeks), but most fixed costs don’t halve: the payroll service charges for the months you use it, workers’ comp is prorated by most carriers, and the background check is still full price. FUTA’s $42 assumes the full $7,000 wage base is reached — at $26,000 in wages it is ($26,000 > $7,000), so FUTA stays $42. Rough part-year total at $25/hr from July: ~$29,000.

Mid-year raises. A raise from $25 to $27/hr in month seven doesn’t just add $2 × remaining hours. It adds the 7.65% employer FICA on the raise, and it resets the “what’s my monthly burn” number your budget was built on. Model raises as: (raise amount × remaining hours × 1.0765) plus any payroll-service tier change.

Two household employees. A nanny and a housekeeper means the fixed lines double where they’re per-employee: FUTA is $42 per employee ($84 total), workers’ comp is priced on total payroll, and some payroll services charge per employee per month. The FICA and wage lines just add. Don’t model the second hire as “more of the same percentage” — re-run the fixed costs.

The discipline is the same in every case: wages × 1.10 gets you close, but the fixed-cost lines are what separate a budget from a guess. Build the full line-item model once, save it, and update the wage line when reality changes.