Considering various child care options is a natural part of parenting, and if you’ve already narrowed down your choices and decided that hiring a nanny is the best fit for your family, you may be asking yourself, “How much does a nanny cost?” It’s crucial to understand the costs involved in any child care decision to ensure it aligns with your budget and provides the care your little ones deserve.
Let’s dive into nanny costs and explore the factors that influence them, helping you make an informed choice and plan accordingly for this invaluable investment in your child’s well-being.
At a glance:
What to include in nanny cost calculations
Average nanny rates by U.S. city
Do I have to pay nanny taxes?
Child care tax credits
Paying nanny insurance
Payroll options
The basics: What is a nanny?
A nanny is not just a caregiver you hire; they become an esteemed member of your family. When you welcome a nanny into your home, they typically work full-time, entering into a formal contract with consistent and regular hours. Their primary duty is ensuring your child’s well-being and fulfilling the responsibilities you’ve agreed upon. As time goes on, nannies often become deeply involved in your child’s development, playing an essential role in their growth and journey through childhood.
What to include in nanny cost calculations
Factors such as your geographical location, the scope of responsibilities you assign to the nanny, and the level of experience they bring to the position should all be included when estimating the average cost of a nanny. For example, a live-in nanny salary estimate might include factors like room and board compared to a part-time nanny. The most common costs to include in nanny pay are:
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- Hourly rate/salary
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- Taxes
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- Child care tax credits
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- Insurance
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- Payroll
How nanny costs vary by job scope
- Part-time nanny cost: A part-time nanny typically works for a set number of hours per week, which can range from a few hours a day to several days a week. The cost of a part-time nanny can vary widely depending on factors such as your location, the nanny’s experience, and the number of hours they work.
- Full-time nanny cost: A full-time nanny provides consistent and regular childcare throughout the week, typically for a standard 40-hour workweek. Full-time nannies offer greater flexibility and stability for families with demanding work schedules or multiple children.
- Live in nanny cost: A live-in nanny resides in your home and provides around-the-clock care. This arrangement is ideal for families who need constant childcare support, especially if parents have irregular or demanding work schedules. The cost of a live-in nanny includes their salary and accommodations.
What is the average nanny salary?
According to UrbanSitter’s latest data, the average nanny hourly rate nationwide is $22.68/hr, with the average nanny salary being $47,000. With a typical payment schedule, the nanny will get paid weekly or biweekly. In addition, they will receive paid time off (sick and vacation time).
Average Nanny Rate by U.S. City
|
Area/U.S. City |
Hourly Nanny Rate |
Annual Nanny Salary |
|
National |
$22.68 |
$47,000 |
|
$21.14 |
$44,000 |
|
|
$22.81 |
$47,000 |
|
|
$21.67 |
$45,000 |
|
|
$17.27 |
$36,900 |
|
|
$19.91 |
$41,000 |
|
|
$19.20 |
$40,000 |
|
|
$16.27 |
$34,000 |
|
|
$18.82 |
$39,000 |
|
|
$19.81 |
$41,000 |
|
|
$19.73 |
$41,000 |
|
|
$19.99 |
$42,000 |
|
|
$17.84 |
$37,000 |
|
|
$19.34 |
$40,000 |
|
|
$22.74 |
$47,000 |
|
|
$19.33 |
$40,000 |
|
|
$18.53 |
$39,000 |
|
|
$18.39 |
$38,000 |
|
|
$22.18 |
$46,000 |
|
|
$12.76 |
$27,000 |
|
|
$19.51 |
$41,000 |
|
|
$18.03 |
$38,000 |
|
|
$17.61 |
$37,000 |
|
|
$20.94 |
$44,000 |
|
|
$18.02 |
$37,000 |
|
|
$23.23 |
$48,000 |
|
|
$17.02 |
$35,000 |
|
|
$20.24 |
$42,000 |
|
|
$17.97 |
$37,000 |
|
|
$21.58 |
$45,000 |
|
|
$25.24 |
$52,000 |
|
|
$24.60 |
$51,000 |
|
|
$11.35 |
$24,000 |
|
|
$20.91 |
$43,000 |
Keep in mind the cost of a nanny varies greatly based on:
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- Location
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- Experience
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- Number of children
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- Driving the kids
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- Additional tasks the nanny is responsible for
There are a lot of advantages to having a nanny and paying a higher rate over other childcare options. Some of the advantages are, a nanny generally has more experience, is more flexible (can come early or stay late – additional compensation may be required depending on the contract), and your child gets one-on-one attention.
Related: UrbanSitter’s Guide to Pay Rates
Taxes: Do I have to pay nanny taxes?
Nanny taxes are an aspect you’ll want to consider in the overall cost. According to the IRS, you become an employer when you hire a full-time nanny (domestic worker). Therefore, you’ll need to apply for an employer identification number (EIN). The Internal Revenue Service (IRS) will require you to pay a Federal Employment tax if you pay your nanny more than $2,600 per year (as of 2023). In some cases there are exceptions, so make sure to review those outlined by the IRS with your tax preparer. The employer and the domestic worker each pay a portion of the tax. An employer can choose to withhold the nanny’s share and pay it for them with those withholdings. In addition, if your nanny earns more than $1,000 a quarter (as of 2023), then social security and Medicare taxes must be paid/withheld. Please note: We are not licensed tax professionals. We encourage you to reach out to your tax professional for any questions or advice.
Child & Dependent Care Tax Credits: Can I get a tax credit?
One way to offset the cost of a babysitter or nanny is to take advantage of the child-care tax credit. The credit for childcare expenses is a percentage of the amount you’ve paid in childcare for children under 13, as long as you are paying a childcare worker to care for your children while you work or look for work. This means you cannot take advantage of the credit if you are hiring a nanny so you can take care of personal errands, run to the gym or simply enjoy some well-deserved time to yourself.
As of 2023, you can count up to $3,000 in expenses for one qualifying child or up to $6,000 in expenses for two or more qualifying dependents. The amount of the tax credit is based on your adjusted gross income and can range from 20%-35% of your expenses. To be eligible for the childcare tax breaks, you must identify the care provider on your tax return, report the wages paid to the nanny, and remit the necessary employment taxes. Please note: We are not licensed tax professionals. We encourage you to reach out to your tax professional for any questions or advice.
Insurance: Do I need to pay insurance for my nanny?
According to the experts, the answer is “yes” and “no” depending on where you live. There are multiple types of insurance: health insurance, workers compensation insurance, employment practices liability Insurance, and auto insurance.
Health Insurance: Most employers will pay into health insurance for their nanny, similar to what small businesses pay.
Workers Compensation Insurance: Most states require you to pay for a policy. This covers you if your nanny has an accident on the job. You’ll need to check if your state requires it.
Employment Practices Liability Insurance (ELPI): This insurance covers you (the employer) in case you are sued by your employee. Many employers are able to have ELPI added to their workers compensation plan.
Auto Insurance: This will depend on if your nanny is your driving your car, driving their car, how often they drive your kids, etc. Since it varies by state, be sure to check with your auto insurance company. Something else to consider is it may be necessary to increase your liability insurance. Lastly, if the nanny is driving their car, you would reimburse them for mileage at $0.56 a mile according to the IRS.
Payroll: What’s the best way to pay my nanny?
Wondering how to pay your nanny legally? Many families prefer to use a payroll service to process payment to their nanny. With a nanny payroll service, the nanny receives their paycheck directly with the taxes and withholdings already taken out of the paycheck. A payroll service such as NannyLane can also take care of tax filings, year-end documents, and pay stubs/receipts, which saves you time and takes one item of your to do list.
Does the cost of a nanny fit your budget?
Ultimately, if a nanny is the best fit for your family’s lifestyle and the cost of a nanny works for your family’s budget, then it’s the right choice for you. If not, a babysitter or a daycare option might be a better fit, here’s a quick comparison between a nanny and babysitter and a look at nanny cost vs. daycare.
Looking for nanny? Join UrbanSitter to browse profiles, sort by pay rate, and book jobs online.
Please note that UrbanSitter is a platform for families and caregivers to connect. We are not an agency and do not employ caregivers. All members are individually responsible for any applicable tax, withholding or reporting. We are not licensed tax professionals. We encourage individuals to reach out to a local tax professional for any questions about tax preparations
