Daycare vs Nanny: The Real Monthly Cost Once Taxes and Sick Days Hit

Every cost of daycare vs nanny page we read lines up 2 sticker prices and calls it a comparison. That is like comparing 2 cars on the monthly payment and skipping insurance.

A nanny is your employee. That means payroll tax, and a W-2 in January. A daycare is a vendor that sends your kid home with a fever on a Tuesday. That means a backup sitter. Both of those costs are real money, and they land on different sides.

So we built the whole monthly bill for 3 setups: a daycare center, a nanny, and a nanny share. Then we ran it again for 2 kids, because that is where the math flips the hardest.

What is the cost of daycare vs a nanny?

For 1 infant, the all-in monthly cost runs about $1,585 at a daycare center, $1,546 at a home daycare, $2,782 per family in a nanny share, and $4,135 with a nanny of your own. Here is how each total is built.

The prices come from Care.com's 2026 Cost of Care Report. It is a survey of parents plus rates posted on Care.com, so it reads high next to government data. We use it because it is the only national source that prices nannies and daycare side by side.

The nanny's all-in number is $365 a month above the wage line. The daycare's all-in number is $146 above the tuition line. Neither shows up on the quote you get on the tour.

The center price here is Care.com's average. The Labor Department's state data runs lower. In the middle state, the 2022 median infant center price was $1,056 a month, and we laid out every state in how much infant daycare costs by state. Swap that price in and the daycare total drops to $1,202, which widens the nanny gap to $2,933.

What taxes do you pay on a nanny in 2026?

A nanny who works in your home and follows your instructions is a household employee, according to IRS Publication 926. The IRS's own example of one is a person paid to babysit a child and do light housework 4 days a week.

For 2026, Pub 926 sets 2 lines that matter:

• $3,000 in cash wages to 1 household employee in 2026 triggers Social Security and Medicare. The total is 15.3% of wages. The employee's share is 7.65% and your share is 7.65%, which breaks down to 6.2% for Social Security and 1.45% for Medicare.
• $1,000 in cash wages in any calendar quarter triggers federal unemployment tax (FUTA). It is 6% of the first $7,000 per employee, less a credit of up to 5.4% for paying state unemployment on time. Net, that is 0.6%, or $42 a year, unless the state is a credit reduction state, where Pub 926 says the credit shrinks.

At Care.com's $870 a week, a nanny crosses the $3,000 line in about 3.4 weeks. The line is low enough that any full-time nanny crosses it in January.

You report all of it on Schedule H, filed with your Form 1040 by April 15, 2027 for 2026 wages. You also hand the nanny a W-2. Pub 926 adds that you may owe state unemployment tax and may need workers' compensation insurance, and both depend on your state, so neither is in our numbers.

Then there is the employee's 7.65%. You can withhold it from the nanny's pay, or Pub 926 lets you pay it yourself. Promise a pay figure with no payroll deductions and both halves land on you. On a $45,240 nanny, that is another $288 a month, and the all-in bill becomes $4,423. Promising true take-home after income tax costs more still.

A quick word on the tax breaks, since another article owns them. A dependent care FSA can exclude up to $7,500 a year from income starting in 2026, according to IRS Publication 15-B, and the Child and Dependent Care Credit counts up to $3,000 of care costs for 1 kid. Both apply whether the money goes to a center or to a nanny, since IRS Publication 503 counts a household employee who cares for your kid. For 1 kid, both bills clear those caps, so the breaks are the same size on both sides and the gap does not move. The full rules are in our infant daycare cost breakdown.

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What do sick days cost with daycare vs a nanny?

This is the line every daycare cost page skips. When the kid runs a fever, the daycare sends him home. In our math, the week still gets billed. Somebody still has to watch him.

We priced a backup day at Care.com's babysitter rate, $175 for 8 hours, which works out to about $21.88 an hour. Then we assumed 10 days a year where the kid cannot go and a parent cannot stay home. That number is our assumption, not a statistic, so here is the whole range.

Even at 20 sick days, daycare stays more than $2,400 a month cheaper for 1 kid. Sick days are real money. They are not nanny money.

We did not cost daycare closure days or a nanny's vacation that does not match yours. Both add backup days, on opposite sides.

A nanny does not send the kid home for a runny nose. But nannies get sick too, and most get paid when they do. In the Berkeley Parents Network's 2025 nanny survey, 57% of 723 families gave paid sick days up to a set number, and 31% more paid them as needed. That survey is Bay Area families, so read it as a sign of the norm, not a national rate.

So the nanny side carries the same backup cost, on fewer days. We used 5. And if the nanny's paid vacation does not line up with yours, add 2 weeks of backup sitter, which is another $146 a month.

How much does a nanny share cost?

In a nanny share, 2 families split 1 nanny. Care.com's nanny share guide uses a standard split where each family pays 2/3 of the full rate. On $870 a week, that is $580 per family, and the nanny earns $1,160 a week.

The tax part is the piece people miss. Each family pays its own share of wages, so each family crosses the $3,000 line on its own, in about 5.2 weeks. That makes each family a household employer with its own Schedule H.

Run it through and a nanny share costs about $2,782 a month per family. That is $1,353 less than a nanny of your own. It is still $1,197 more than a daycare center.

The share buys the in-home setup and fewer sick-day pickups at about 1.76x the daycare bill. Whether that trade is worth $1,197 a month is a family call. The number is the number.

Is a nanny cheaper than daycare for 2 kids?

Not in the national averages, but the gap gets a lot smaller. This is where the second kid changes the math.

Care.com's report prices 2 kids for toddlers, not infants, so this table uses toddler rates. Its 2-kid daycare figure already includes a 10% sibling discount.

We kept daycare at 10 sick days for 2 kids. Two kids in daycare means more days with someone home. At 15 days the daycare side is $2,746 and the gap is $1,769.

Kid number 2 adds $1,195 a month at daycare. With a nanny, kid number 2 adds $72. Daycare bills per child. A nanny bills per hour.

So the nanny premium falls from $2,962 a month with 1 toddler to $1,839 with 2. In ratio terms, the nanny drops from 3x the daycare bill to about 1.69x.

The national numbers stop at 2 kids. Our 3rd-kid estimate is in the FAQ below. The pattern is plain, though. Every extra kid narrows the gap, and the variable that closes it is how many kids share 1 nanny.

One more thing for the second-kid house. That $2,535 daycare line is $30,420 a year. A bill that size, running 3 or 4 years, is the kind of line our term life number math counts, since paying for childcare is part of what a policy replaces.

Why does a nanny cost so much more than daycare?

Because a daycare splits 1 adult across several babies, and a nanny is 1 adult for your kid.

The pediatric standard our daycare cost article cites, Caring for Our Children, calls for no more than 3 infants per caregiver in a center. At the BLS median wage for childcare workers in the day care industry, $16.43 an hour in May 2025, 1 caregiver's 40-hour year split 3 ways is about $11,391 per baby in wages. A nanny at Care.com's rate is $45,240 for 1 baby.

Nannies also earn more per hour. Across all 518,910 childcare workers it counts, the BLS median is $16.82 an hour and the 90th percentile is $22.12. Care.com's nanny rate of $21.75 sits near that top 10%. The International Nanny Association's 2022 survey put the median nanny at $25 an hour.

None of that is the nanny overcharging. It is 1 grown-up per kid, and the hourly rate reflects that the job comes with no co-workers and a lot of crackers.

What happens to the nanny cost past 40 hours?

Federal rules require overtime. Under 29 CFR 552.100, a domestic worker who works more than 40 hours in a week for the same employer gets at least 1.5x the regular rate for the extra hours. Under federal law, a nanny who lives in your home is exempt from the overtime part. Some states, New York among them, require it.

A 9-hour day, 5 days a week, is 45 hours. At $21.75 an hour, 5 overtime hours a week cost $163.13. Over a year, with the extra payroll tax, that moves the nanny's all-in bill from $4,135 a month to $4,896, a jump of $761.

Guaranteed hours push the same direction. In the Berkeley Parents Network survey, 62% of families paid the nanny when she was not needed, and 58% paid for the kids' planned vacations. Those are paid hours with nobody to watch.

What is the average cost of home daycare?

Care.com's 2026 report puts a home daycare, which it calls a family care center, at $323 a week for 1 infant, or about $1,400 a month. That is $39 a month under its daycare center figure once sick days are added to both.

The government data shows a bigger gap. In the Labor Department's 2022 state medians, the median family child care home price across states was $784 a month for an infant, against $1,056 for centers. Our state-by-state daycare breakdown has the home vs center comparison and the full state table.

A home daycare carries the same sick-day problem as a center. The kid with a fever still comes home.

What is the cost of daycare vs preschool?

Preschool-age care costs less, because the ratios loosen as kids get older. In the Labor Department's database, preschool means 36 through 54 months.

In the middle state, the center bill drops $215 a month between the infant room and the preschool room. The infant price was higher than the preschool price in all 45 places with data.

The nanny bill does not fall that way. Care.com's toddler nanny rate, $936 a week, sits above its infant rate. A nanny's cost tracks the hours, not the kid's age.

Frequently asked questions

Is a nanny more expensive than daycare?

For 1 baby, yes, by a lot. Using Care.com's 2026 posted rates plus 2026 payroll taxes and sick-day backup, a nanny costs about $4,135 a month and a daycare center about $1,585.

How much are nanny taxes in 2026?

Once you pay a nanny $3,000 or more in cash wages in 2026, the employer share is 7.65% of wages for Social Security and Medicare, per IRS Publication 926. Federal unemployment tax adds 0.6% of the first $7,000, or $42. On a $45,240 nanny that is $3,503 a year, before any state taxes.

Do I have to pay taxes on a nanny if I pay cash?

Yes. In IRS Publication 926, cash wages include pay by check or money order, so paying in cash or by check counts the same toward the $3,000 threshold for 2026. The taxes go on Schedule H with your Form 1040.

How much does a nanny share save?

At Care.com's standard 2/3 split, each family pays $580 a week instead of $870. All in, that is about $2,782 a month per family versus $4,135 for a solo nanny, a savings of $1,353.

Is a nanny cheaper than daycare for 2 kids?

Not in the national averages, but more than a third of the gap disappears. With 2 toddlers, Care.com's rates put a nanny at about $4,515 a month all in versus $2,676 for daycare, a gap of $1,839.

Is home daycare cheaper than a nanny?

Yes, by a lot. For 1 infant, Care.com's posted rates put a home daycare at about $1,546 a month all in against $4,135 for a nanny. Home daycare vs a center is in our infant daycare cost breakdown.

Does a nanny get overtime?

A nanny who lives out gets at least 1.5x pay past 40 hours a week under 29 CFR 552.100. Under federal law, a live-in nanny is exempt from overtime but not from minimum wage. Some states, New York among them, require overtime for live-ins too.

At what point is a nanny cheaper than daycare?

Our estimate, not a published figure: a 3rd toddler at Care.com's sibling-discounted daycare rate adds about $1,201 a month, against the $1,839 gap at 2 kids. If the nanny rate barely moves, the gap at 3 kids is about $638, and a 4th kid flips it. Break-even lands at 3 kids only where local daycare runs about 17% above Care.com's average.

Rules current as of Oct 2026: household employee threshold $3,000 in cash wages for 2026, employer Social Security and Medicare 7.65%, FUTA 0.6% of the first $7,000, Social Security wage base $184,500, dependent care FSA limit $7,500. Care prices are Care.com's 2026 report (2025 rates) and Labor Department 2022 medians. Rates and limits move, so check the date on this line before you lean on it.