If cash wages to any one household employee in 2026 stay under $3,000, no social security or Medicare tax applies.
Key takeaways
- Before you open Schedule H for a client with a household worker, mark the 2026 cash wages against the $3,000 sentence from Publication 926 (2026), Household Employer’s Tax Guide | Internal Revenue Service.
- The guide states that you must pay cash wages of $3,000 or more in 2026 to any one household employee to trigger the requirement, according to Internal Revenue Service. If the total cash wages to that specific employee fall below this amount, the 2026 annual test is not met.
- Check the quarterly total for all household employees as well. The same publication notes that you must pay total cash wages of $1,000 or more in any calendar quarter of 2025 or 2026 to household employees, according to Internal Revenue Service. This separate quarter test applies to the combined wages of all household employees, not just one individual.
- Keep this rate distinct from any other payroll calculations in your workpapers. For a prior file, use Workpaper recovery: 4 checks for a prior version.
The short answer on the $3,000 household cash-wage test
The 2026 threshold for household employees is $3,000 in cash wages paid to any one household employee in 2026, according to Internal Revenue Service. If the client’s household worker receives less than $3,000 in cash wages in 2026, none of the wages paid to that employee are social security or Medicare wages, and neither the employer nor the employee owes social security or Medicare tax on those wages, according to Internal Revenue Service.
Before opening Schedule H, write the worker’s 2026 cash wages on a note and mark them against the $3,000 sentence. If the total is below $3,000, the wages are not subject to social security or Medicare tax under Publication 926 (2026). If the total reaches $3,000 or more, the wages are subject to those taxes, and the return must reflect that.
The $3,000 figure is the 2026 annual test. A separate quarterly test also exists in Publication 926 (2026), but that sentence belongs to the section on quarterly thresholds. Do not use the 2025 instructions’ $2,800 figure as the 2026 test; the 2026 figure is $3,000, according to Internal Revenue Service.
The 2026 cash-wage tests in Publication 926
Publication 926 (2026), Household Employer’s Tax Guide | Internal Revenue Service sets the 2026 annual cash wage test for household employees. If you pay your household employee cash wages of $3,000 or more in 2026, all cash wages you pay to that employee in 2026 (regardless of when the wages were earned) up to $184,500 are social security wages and all cash wages are Medicare wages, according to Internal Revenue Service. This sentence defines the threshold that triggers federal social security and Medicare wage classification for the household worker.
The guide also provides a separate quarterly test. You must pay total cash wages of $1,000 or more in any calendar quarter of 2025 or 2026 to household employees, according to Internal Revenue Service. This quarterly figure operates independently from the annual $3,000 test.
When the wage thresholds are met, the tax shares are specific. Your share is 7.65% (6.2% for social security tax and 1.45% for Medicare tax) of the employee’s social security and Medicare wages, according to Internal Revenue Service. Your employee’s share is also 7.65% (6.2% for social security tax and 1.45% for Medicare tax), according to Internal Revenue Service.
Illustrative example of the annual and quarter tests
Treat this walk-through as illustrative. One household employee receives $1,000 in cash wages in 2026, which is under $3,000, so none of those wages are social security or Medicare wages. A second household employee receives $3,000 in cash wages in 2026, so those wages meet the annual test. In one calendar quarter of 2026, total cash wages to household employees are $1,000, so the separate quarter test is met. Record each result on the household-worker note before Schedule H is prepared. Leave the other rows blank until the cash wages are written down.
The 2025 instruction figures, kept in their own year
The Instructions for Schedule H (2025) from the Internal Revenue Service sets a specific threshold for withholding and paying social security and Medicare taxes. If you have a household employee, you need to withhold and pay social security and Medicare taxes if you paid cash wages of $2,800 or more in 2025 to any one household employee, according to Internal Revenue Service. This figure applies strictly to the 2025 tax year as described in that document.
The same instructions address federal unemployment tax under the FUTA. You need to pay federal unemployment tax under the FUTA, if you paid total cash wages of $1,000 or more in any calendar quarter of 2024 or 2025 to household employees, according to Internal Revenue Service. This quarter test covers both 2024 and 2025 calendar quarters. When preparing a return for a client, keep these 2025 instruction figures distinct from the 2026 thresholds found in Publication 926.
Review the client’s payroll records for the specific calendar quarters of 2024 and 2025 to determine if the $1,000 FUTA threshold was met. Record the total cash wages paid to household employees for each quarter separately. This ensures the 2025 instruction figures are applied to the correct tax periods without mixing them with 2026 data. See Payroll intake review against 4 source guides while you review those records.
The statute sentence and the Paychex $1,000 sentences
The U.S. Code defines a specific exclusion for domestic service in the context of social security taxes. According to Government Publishing Office, 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) is excluded 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. This sentence appears in the text of U.S.C. Title 26 - INTERNAL REVENUE CODE. It establishes that the threshold for this specific exclusion is not a fixed number in the text of this subsection but is defined in subsection (x).
The Legal Information Institute provides a clarifying definition regarding the nature of this service. According to Legal Information Institute, as used in this subparagraph, the term “service not in the course of the employer’s trade or business” does not include domestic service in a private home of the employer and does not include service described in subsection (g)(5). This definition from 26 U.S. Code § 3121 - Definitions | U.S. Code | US Law | LII / Legal Information Institute ensures that domestic service in a private home is not categorized as service outside the employer’s trade or business. It distinguishes household work from other types of service that might fall under different tax treatments.
Paychex outlines the Federal Unemployment Tax Act (FUTA) requirements for household employees. According to Paychex, according to the Federal Unemployment Tax Act, employers who pay wages to household employees, including nannies and housekeepers, but do not meet the $1,000 threshold are not required to pay taxes.
Filled reference table from the IRS, the statute text, and Paychex
The following table isolates the specific wage thresholds and rules from the three distinct publishers. Each row names the publisher and quotes the exact rule provided in their source documents.
| Publisher | Source Document | Quoted Wage Threshold or Rule |
|---|---|---|
| Internal Revenue Service | Publication 926 (2026), Household Employer’s Tax Guide | Pay cash wages of $3,000 or more in 2026 to any one household employee. |
| Government Publishing Office | U.S.C. Title 26 - INTERNAL REVENUE CODE | (B) 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; |
| Paychex | What Is FUTA? The Federal Unemployment Tax Act | According to the Federal Unemployment Tax Act, employers who pay wages to household employees, including nannies and housekeepers, but do not meet the $1,000 threshold are not required to pay taxes. |
The Internal Revenue Service states the 2026 threshold in Publication 926 (2026), Household Employer’s Tax Guide. The Government Publishing Office provides the statutory language for domestic service in U.S.C. Title 26 - INTERNAL REVENUE CODE. Paychex describes the Federal Unemployment Tax Act threshold in What Is FUTA? The Federal Unemployment Tax Act.
Use this table to verify the source of each number before you prepare the return. Do not mix these figures across different tax types.
A blank household-worker note for this client
Use this note to record the client's 2026 cash wages before you open Schedule H.
| Worker | 2026 cash wages | $3,000 test |
|---|---|---|
| Example | write the cash wages here | mark whether the wages reach the annual test |
Fill in the client's name and the wage figure, then mark the test result. This keeps the decision tied to the specific 2026 sentence rather than a general assumption.
Do this today
To apply these rules to a client’s return, verify the 2026 cash wages against the $3,000 sentence first. Then check each calendar quarter against the $1,000 sentence. Record the employer and employee shares at 7.65% for the applicable social security and Medicare wages. This sequence ensures the correct wage classification before Schedule H is prepared. Gather the client file with Accounting Client Intake Checklist for a Clear Handoff.
Household employee Schedule H FAQ
What does the 2026 $3,000 sentence say?
Publication 926 states that you must pay cash wages of $3,000 or more in 2026 to any one household employee, according to Internal Revenue Service.
What does the $1,000 quarter sentence say?
The guide notes that you pay total cash wages of $1,000 or more in any calendar quarter of 2025 or 2026 to household employees, according to Internal Revenue Service.
What do the 7.65 percent sentences say?
The employee’s share is also 7.65% of their social security and Medicare wages.
What does Paychex's $1,000 sentence say and not say?
According to the Federal Unemployment Tax Act, employers who pay wages to household employees, including nannies and housekeepers, but do not meet the $1,000 threshold are not required to pay taxes, according to Paychex. This sentence addresses the Federal Unemployment Tax Act threshold specifically. It does not define the social security cash-wage test, which is governed by the $3,000 sentence in Publication 926.