Employing a nanny means you need to be aware of changes to employment laws. In 2026, New York has a new minimum wage that impacts all employers. There is also a new tax threshold that determines whether or not you need to pay employment taxes. And if your nanny uses their personal vehicle while on the job, there are new mileage reimbursement rates.
2026 Minimum Wage Increase for New York
The following changes to the New York minimum wage and salary thresholds were effective January 1, 2026.
New York City and Suffolk, Nassau, and Westchester Counties
The minimum wage is now $17.00 per hour.
Industry-specific hourly minimum wages increased to:
- Tipped hospitality service workers: $14.15
- Tipped hospitality food service workers: $11.35
- Home care aides: $19.65
The minimum salary threshold for exempt executive and administrative employees increased to $1,275 per week ($66,300 annually).
The Rest of New York State
The minimum wage in the remainder of New York State (all areas outside of New York City, and Suffolk, Nassau, and Westchester counties) increased to $16.00 per hour.
Industry-specific hourly minimum wages increased to:
- Tipped hospitality service workers: $13.30
- Tipped hospitality food service workers: $10.70
- Home care aides: $18.65
The minimum salary threshold for exempt executive and administrative employees increased to $1,199.10 per week ($62,353.20 annually).
Nanny Tax Threshold Increases for 2026
The Social Security Administration (SSA) recently released next year’s Employment Coverage Threshold for household employees, commonly called the “nanny tax threshold.” The 2026 nanny tax threshold increases by $200 to $3,000, marking the seventh consecutive year this threshold has increased.
If a nanny or other household employee, such as a housekeeper, private teacher, or in-home senior caregiver, earns $3,000 or more in cash wages in 2026, the family and the employee must pay Social Security and Medicare taxes, commonly called FICA taxes or “nanny taxes.” Earnings below the nanny tax threshold aren’t taxable under Social Security.
While many full- and part-time household employees will exceed the nanny tax threshold, temporary or seasonal domestic workers like summer and after-school nannies can easily reach that threshold and trigger nanny tax compliance.
2026 Standard Mileage Rates
The IRS has updated the standard mileage rates that many employers use to reimburse employees for business travel in personal vehicles. These mileage rates are key for payroll, expense policy planning, and tax compliance, and are especially important for employees who frequently drive for work.
For the 2026 tax year, the Internal Revenue Service (IRS) announced changes to the standard mileage rates that took effect January 1, 2026:
| Use Type | 2026 IRS Mileage Rate |
|---|---|
| Business use (cars, vans, pickups) | 72.5¢ per mile |
| Medical travel | 20.5¢ per mile |
| Moving (certain military personnel) | 20.5¢ per mile |
| Charitable purposes | 14¢ per mile (unchanged) |
The business rate has increased by 2.5 cents from the 2025 rate, while the medical and moving rates have decreased by half a cent. The charitable rate remains unchanged because it is set by statute and has historically changed very slowly.
What This Means for Employers
Employers often use the IRS mileage rate as a benchmark to reimburse employees who drive personal vehicles for work-related activities.
You are not required to reimburse at the IRS rate; any amount above that rate is usually taxable to the employee. Employers may choose a lower rate if needed, but doing so can affect employee satisfaction and retention.
Regardless of the rate used, accurate mileage records are essential. Have employees maintain date, destination, business purpose, and total miles driven to substantiate reimbursements and deductions.
We recommend notifying employees in advance of the new rates so they understand how reimbursements will be calculated and processed.
Need Help with Employment Law Compliance?
Staying on top of employment laws can be a daunting task – that’s why we recommend our families partner with GTM Payroll & HR to pay their nanny legally. They will not only manage your household payroll and taxes throughout the year but also offer a year-end package that includes Schedule H, Form W-2 for your employees, and Form W-3, which they will file with the Social Security Administration. That means less paperwork, fewer potential tax mistakes, and more free time for you.
Plus their HR experts can help ensure you stay on top of labor laws so you stay in compliance. Call GTM at (800) 929-9213 for a free consultation with a household employment expert. Or schedule time with them at your convenience.
And if you need full- or part-time care, or just occasional babysitting, after-school care, housekeeping, or anything else in your home, let us know how we can help!
Request a service or give us a call at (518) 348-0400 and we’ll provide a free consultation to get you the care you need.