Nanny vs Daycare Calculator
Compare the true cost of hiring a nanny (including required employer taxes) against daycare center and home daycare — with FSA savings and multi-child analysis.
Total cost chart including all employer taxes, multi-child breakeven analysis showing when nanny becomes cheaper.
Full nanny employment cost (FICA, FUTA, SUTA, workers comp, insurance, PTO), au pair alternative analysis, and complete tax filing guide.
How the Nanny vs Daycare Calculator Works
Comparing nanny vs. daycare costs is more complex than it appears. A nanny's hourly wage is just the starting point — as an employer, you must also pay payroll taxes that add approximately 10–12% on top of gross wages. This calculator computes the true cost of a nanny including required employer taxes, then compares it to daycare center and home daycare costs.
The key insight is that nannies become cost-competitive when you have two or more children. Daycare centers charge per child; a nanny's cost covers all your children. With two children in a center at $1,230/month each, you're paying $2,460/mo — comparable to or exceeding a nanny's true cost.
The "With Tax Benefits" tab shows how the Dependent Care FSA applies equally to both options, reducing the net cost of whichever you choose. The FSA only covers the first $5,000 of childcare costs, so its relative impact is smaller for higher-cost options like nannies.
True Nanny Cost Formula
Important: the "nanny tax" is legally required. Paying a nanny more than $2,700/yr (2024 threshold) triggers household employer obligations. Failing to pay these taxes can result in penalties, back taxes, and complications when the nanny files for unemployment benefits.
Example Calculation
Example: Full-time nanny at $20/hr vs. daycare center, one child
With one child, daycare is $29,542/yr cheaper than a nanny. With two children, the gap narrows to roughly $15,000–$21,000/yr. With three children, a nanny can actually be cheaper than three daycare slots.