A household that pays a nanny, caregiver or housekeeper $3,100 or more in 2027 will owe Social Security and Medicare taxes on that worker’s wages. The Social Security Administration set the 2027 household worker threshold at $3,100 in its annual determinations notice, up from $3,000 for 2026. The notice is scheduled to run in the Federal Register on Oct. 26.

The question for families that hire help at home is whether their arrangement counts. The IRS says a household has an employee “if you hired someone to do household work and that worker is your employee,” and its list of household workers includes nannies, housekeepers and caretakers. Once cash wages to any one of those workers reach the threshold in a calendar year, the taxes apply to that worker’s pay.

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How Social Security arrives at $3,100

The agency’s notice, published as cost-of-living increase and other determinations for 2027, describes the figure as “the minimum amount a domestic worker must earn” for the earnings to be covered under Social Security or Medicare. It states: “For 2027, this threshold is $3,100.”

The number comes from a formula. It starts with the 1995 amount of $1,000 and scales it by the change in the national average wage index. The unrounded result is $3,147.08, and the notice rounds it down to the nearest $100, which gives $3,100.

What changes from the 2026 threshold?

The IRS’s 2026 edition of Publication 926 states the current rule: Social Security and Medicare taxes apply if a household pays “cash wages of $3,000 or more in 2026 to any one household employee.” The 2027 threshold is $100 higher.

In practice, a worker paid $3,050 over the course of 2027 falls under the line, while the same $3,050 in 2026 would have crossed it. Pay at or above $3,100 in 2027 brings the taxes in for that worker. The IRS list of household workers also includes health aides and private nurses, so the rule reaches home health arrangements as well as child care and cleaning.

Who owes the tax on a household worker?

The employer carries the duty. IRS Publication 926 tells household employers to “withhold and pay social security and Medicare taxes.” The worker’s share is 7.65 percent, made up of 6.2 percent for Social Security and 1.45 percent for Medicare, and the employer’s own share is also 7.65 percent.

An employer can either withhold the worker’s share from wages or pay it from the employer’s own funds. The IRS adds that federal income tax withholding is not required for a household employee, and that federal unemployment tax, known as FUTA, must come from the employer’s money and is never withheld from the worker.

Which household helpers do not count?

Some wages are left out of the Social Security and Medicare count. The IRS lists an employer’s spouse, the employer’s child under 21 and the employer’s parent, with an exception for certain caregiving situations. An employee under 18 is also left out unless household work is the person’s principal occupation. A student who does household work is not treated as having it as a principal occupation.

The threshold applies per worker. A household with two employees compares each worker’s yearly cash wages to $3,100 separately, so one worker can cross the line while another does not.

What other 2027 Social Security figures were set?

The same notice sets the 2027 cost-of-living increase at 3.6 percent for benefits payable in January 2027. It puts the maximum earnings subject to Social Security tax, the contribution and benefit base, at $192,300.

It also sets the earnings needed for one quarter of Social Security coverage in 2027 at $1,970. For a household worker, wages above the threshold are the earnings that Social Security counts toward that worker’s own record, and the open question for each family is whether any one worker’s 2027 pay will cross $3,100.

Hiring help at home before the 2027 threshold?

Retirees who employ help at home are often the same people watching a Social Security benefit that rises 3.6 percent in January, because a bigger check can change how much of it is taxed. Household payroll taxes are one more line in a tax year that already has several moving parts.

The Retirement Tax & Withdrawal Planner covers the senior deduction, the account withdrawal order and four calculators for provisional income, IRMAA tier, RMD schedule and Roth bracket fill. It does not handle household payroll; it works through the retiree tax side of the same year.

Get the provisional-income calculators and planner for a retiree paying for help at home →

More Financial Reading

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• 15 Steps to Stop the Scams That Took $7.7 Billion From Seniors

This article was produced with AI assistance and edited for accuracy against the sources linked above.