Updated October 28, 2026. Quick answer: The nanny tax threshold for 2027 is $3,100: a household employee paid that much or more in cash wages in 2027 is covered by Social Security and Medicare. It was $3,000 for 2026. The Social Security Administration published the 2027 figure on October 26, 2026, so this is an announced number, not an estimate.
More on the 2026 tax figures: the 2026 nanny tax threshold.
The 2027 threshold
The Social Security Administration defines the term and states the figure together: “The minimum amount a domestic worker must earn so that such earnings are covered under Social Security or Medicare is the domestic employee coverage threshold. For 2027, this threshold is $3,100.”
| Year | Household employee coverage threshold | Source |
|---|---|---|
| 2026 | $3,000 | Social Security Administration, Federal Register, November 3, 2025 |
| 2027 | $3,100 | Social Security Administration, Federal Register, October 26, 2026 |
| Statutory base amount before indexing | $1,000 | 26 U.S.C. 3121(x) |
For 2026 the Administration wrote “The minimum amount a domestic worker must earn so that such earnings are covered under Social Security or Medicare is the domestic employee coverage threshold. For 2026, this threshold is $3,000.” The Schedule H form walk-throughs on this site start at Schedule H household employment taxes.
What the statute says
The rule is in section 3121(a)(7)(B) of the Internal Revenue Code, which leaves out “cash remuneration paid by an employer in any calendar year to an employee for domestic service in a private home of the employer (including domestic service on a farm operated for profit), if the cash remuneration paid in such year by the employer to the employee for such service is less than the applicable dollar threshold (as defined in subsection (x)) for such year”. The wording is “less than”, so wages of exactly $3,100 or more in 2027 are covered, and wages below $3,100 are not.
How the $3,100 is computed
Section 3121(x) sets a base of $1,000 and tells the Commissioner of Social Security to adjust it each year, with 1993 as the comparison year; “If any amount as adjusted under the preceding sentence is not a multiple of $100, such amount shall be rounded to the next lowest multiple of $100.”
The Administration printed its inputs: “Multiplying the 1995 domestic employee coverage threshold ($1,000) by the ratio of the national average wage index for 2025 ($72,800.33) to that for 1993 ($23,132.67) produces $3,147.08. We then round this amount to $3,100.” Our own check of that arithmetic: $1,000 times $72,800.33 divided by $23,132.67 is $3,147.08 (computed), which rounds down to $3,100.
What the threshold is not
It is one test for one tax. It is the Social Security and Medicare coverage test for wages paid to a household employee. Other taxes on household wages, such as federal unemployment tax, are separate and are covered on Schedule H Part II, and the Social Security wage base of $192,300 for 2027, covered on the 2027 Social Security wage base, is a ceiling on taxed earnings, not a starting point.
Common mistakes
- Using last year’s $3,000. For wages paid in 2027 the test is $3,100.
- Adding every household worker together. The statute looks at the cash remuneration an employer pays to each employee.
- Confusing it with the Social Security wage base. The $3,100 decides whether wages are covered at all; the wage base caps how much of a worker’s pay is taxed for Social Security.
Related: Schedule H household employment taxes, Form 1040 line 1b household employee wages, the 2027 Social Security wage base, the 2027 Social Security COLA, and the 2027 tax numbers.
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Answer againSources
- Social Security Administration, Cost-of-Living Increase and Other Determinations for 2027, 91 Federal Register 67380 (October 26, 2026): www.govinfo.gov
- Social Security Administration, Cost-of-Living Increase and Other Determinations for 2026, 90 Federal Register 49047 (November 3, 2025): www.govinfo.gov
- 26 U.S.C. 3121, Definitions (U.S. Code, 2024 edition, U.S. Government Publishing Office): www.govinfo.gov
Read from the primary documents linked above on October 28, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer or the IRS itself is the right place to confirm anything consequential.