Household Employer Numbers for 2026

The $3,000 threshold and the 7.65% shares

IRS Publication 926 says Social Security and Medicare taxes apply to household workers paid $3,000 or more in cash wages in 2026. This is a yearly cash-wage threshold for the worker, rather than a weekly pay target. Keep a running wage total alongside the weekly hours so you can see how the job fits the IRS test.

The IRS gives a Social Security rate of 6.2% each for the employee and employer, plus a Medicare rate of 1.45% each. Together, those rates make a 7.65% employee share and a separate 7.65% employer share. When discussing pay, distinguish the employee's gross wages, deductions, and the family's employer share; they answer different budget questions.

Publication 926 sets the 2026 Social Security wage base at $184,500 and says Medicare has no wage base limit. A wage base limits the wages subject to that particular tax. It is a different concept from the cash-wage threshold that determines whether these household employment taxes apply.

Federal unemployment tax: the $1,000 quarter rule

For federal unemployment tax, or FUTA, the IRS uses total cash wages paid to household employees: $1,000 or more in any calendar quarter of 2025 or 2026. Notice both differences from the Social Security and Medicare test: this figure covers total household wages, and the test looks at a calendar quarter rather than only an annual wage total for a worker.

Publication 926 lists a tax rate of 6% of cash wages and says wages over $7,000 a year per employee are not taxed under FUTA. The publication also says state unemployment tax may be owed. Keep the quarterly total and each employee's annual wages available when discussing the federal calculation and any state obligations with a tax professional.

Overtime and the new employee deduction

IRS Publication 926 describes the One Big Beautiful Bill Act (P.L. 119-21) deduction for qualified overtime compensation for tax years 2025–2028. The IRS gives a maximum of $12,500, or $25,000 if married filing jointly. Those are deduction ceilings, not an assurance that a caregiver can deduct that amount.

The IRS defines qualified overtime as compensation above the regular rate that the Fair Labor Standards Act (FLSA) requires. Its example is the "half" portion of time-and-a-half. The publication explains that covered, nonexempt employees must generally receive at least one-and-a-half times their regular rate after 40 hours worked in a week. Do not assume that every extra shift, agreed premium, or overtime payment meets the deduction's definition.

For practical recordkeeping, show regular pay and the overtime premium separately and retain the hours behind them. The deduction is claimed on the individual's income tax return. Check eligibility before relying on it when planning take-home pay, and keep the agreed wage and overtime terms clear in the work agreement.

The child and dependent care credit from 2026

The IRS's Working Families Tax Cuts overview says the Child and Dependent Care Credit helps eligible taxpayers offset qualifying care costs so they can work or actively look for work. Beginning with tax year 2026, the maximum credit rate rises from 35% to 50% of qualifying expenses. The expense limits remain $3,000 for one qualifying individual and $6,000 for two or more.

The IRS says the actual credit depends on income and other eligibility requirements. The maximum rate is not a promise about a particular family's return. Its examples of eligible care for a qualifying child under 13 include day care, before- and after-school care, and day camps. It also includes care for a spouse or dependent incapable of self-care. Generally, overnight camps, schooling costs, and expenses unrelated to work do not qualify. Keep expense records and check the applicable requirements before counting a credit toward the childcare budget.

Key dates for the 2026 tax year

The IRS Publication 926 calendar lists February 1, 2027 for obtaining an employer identification number (EIN), giving the employee Form W-2 Copies B, C, and 2, and sending Copy A with Form W-3 to the Social Security Administration (SSA).

The IRS also states an exception: do not send Form W-2 to the SSA if no federal income tax was withheld and the employee's Social Security and Medicare wages were below $3,000 for 2026. Check the reporting requirements for your situation rather than treating the calendar as a requirement to send every form.

By April 15, 2027, the IRS calendar says to file Schedule H with the 2026 federal income tax return, or by itself if no return is required. Agree on who gathers the wage records and prepares the forms before those dates arrive.