How Much Does a Nanny Actually Cost?
The national average for a full-time nanny is $2,700/month in take-home pay. Add employer taxes and you're at $3,024/month. Over a year: $36,288. That's before agency fees, backup care, or paid time off.
By comparison, full-time infant daycare averages $1,230/month nationally. For one child, daycare is cheaper by $1,500–$1,800/month. That gap is $18,000–$21,000/year.
When a Nanny Costs Less Than Daycare
Two children. That's the threshold. Two infant daycare spots at $1,230 each = $2,460/month. One nanny watching both: $3,000–$3,200/month with employer taxes. The gap narrows to $540–$740/month — much easier to justify when you factor in schedule flexibility and avoiding the daily drop-off logistics.
Add a third child under 5 and the nanny is cheaper outright. Three daycare spots at $1,230 each = $3,690/month versus one nanny at $3,000–$3,500/month.
The Nanny Share: A Middle Path
A nanny share splits one nanny between two families. Each pays $1,500–$2,100/month. The nanny earns $3,000–$4,200/month total — more than either family would pay alone, which makes it easier to attract qualified candidates. It's a genuine win-win when schedules align. Finding the right share partner takes effort, but the savings are real: $600–$1,200/month less than a solo nanny arrangement.
Nanny Cost by Region
Geography moves nanny wages more than almost any other factor. Washington DC nannies average $4,200/month, compared to $1,700–$1,800/month in Alabama or Arkansas. California runs $3,500/month. Rural Midwest states: $2,000–$2,200/month. The table above shows every state's numbers.
What You Have to Pay as a Household Employer
Hiring a nanny makes you an employer under IRS rules. You cannot treat a nanny as a contractor — the IRS position is clear on this, and the penalties for misclassification are real. Required costs:
- Employer Social Security and Medicare: 7.65% of wages
- Federal unemployment tax (FUTA): 0.6% on the first $7,000/year in wages
- Workers' compensation insurance: $400–$900/year (required in most states)
- Quarterly payroll filings and Schedule H on your annual tax return
Budget 20–25% above the nanny's gross wages for total employer cost. Use a payroll service like GTM Payroll or HomePay ($500–$800/year) to handle filings. The alternative is doing it yourself and hoping you don't make a mistake that triggers a penalty.