The Hidden Costs of Hiring a Nanny in Ohio: What Families in Cincinnati and Cleveland Need to Know

Hiring a nanny is a wonderful solution for many families seeking personalized, in-home childcare. But while the benefits are substantial, the true cost of hiring a nanny often goes far beyond the hourly wage you agree upon. From payroll taxes to insurance and benefits, many Ohio families are caught off guard by expenses they didn’t budget for.

Whether you live in Cincinnati or Cleveland, understanding the full financial picture of hiring a nanny is critical to building a successful, long-term caregiver relationship—and avoiding legal or tax complications. This guide will walk you through the often-overlooked expenses so you can hire with confidence.

1. You Become a Household Employer

When you hire a nanny directly (without going through an agency that employs them), you become a household employer in the eyes of both the IRS and the State of Ohio. That means you're responsible for payroll taxes, legal compliance, and employee documentation.

Required Employer Taxes:

• Social Security & Medicare (FICA): You must withhold 7.65% from your nanny's pay and match that amount, bringing the total to 15.3%.

• Federal Unemployment Tax (FUTA): Usually 6% on the first $7,000 paid.

• Ohio Unemployment Tax (SUTA): In Ohio, new employers typically pay 2.7% on the first $9,000 of wages.

These taxes can add 10% to 15% on top of your nanny's gross pay. If you’re paying $40,000/year, expect an additional $4,000-$6,000 in taxes.

Learn more: GTM Household Employment in Ohio

2. Workers' Compensation Insurance (Mandatory in Ohio)

Ohio requires all household employers paying $160 or more per quarter to carry workers' compensation insurance. This coverage protects your nanny if they are injured while working in your home or transporting your children.

• You can apply through the Ohio Bureau of Workers' Compensation.

• Rates vary based on the provider, but expect several hundred dollars per year.

Failure to carry workers' compensation in Ohio can result in fines and being barred from employing in the future.

Source: Nest Payroll - Ohio Household Employer Checklist

3. Overtime Pay Requirements

Many families underestimate this cost. According to the Fair Labor Standards Act, nannies must be paid 1.5x their regular rate for any hours worked over 40 in a week.

Let’s break this down:

• Hourly rate: $20/hour

• Regular 40 hours: 40 x $20 = $800

• 10 overtime hours: 10 x $30 = $300

Total weekly cost: $1,100

Even if you didn’t plan to need 50 hours, unexpected work travel, sick days, or traffic can add overtime hours fast.

Learn more: GTM Budgeting for a Nanny

4. Paid Time Off and Holiday Benefits

To attract and retain a high-quality nanny, you’ll want to offer PTO and holiday pay. While these aren’t legally mandated in Ohio, they are industry standard and increasingly expected.

Typical benefits include:

• 2 weeks paid vacation

• 5 sick days

• 6-10 paid holidays

For a $20/hour nanny working 40 hours per week, this could mean paying for up to $2,800/year in non-working hours.

Some families also offer:

• Bereavement leave

• Paid parental leave

• Jury duty pay

Source: Care.com - Nanny Contracts

5. Health Insurance Contributions

Although not required, many families contribute to a nanny’s health insurance to remain competitive. This can be done through:

• A Qualified Small Employer Health Reimbursement Arrangement (QSEHRA)

• A monthly stipend (taxable to the nanny)

Even modest contributions of $200/month can cost you $2,400/year, but it greatly improves job satisfaction and loyalty.

6. Payroll Software or Services

To comply with federal and state tax laws, many families use services like GTM Payroll, HomeWork Solutions, or SurePayroll. These services typically handle:

• Direct deposit

• Quarterly and annual tax filings

• W-2 generation

• PTO tracking

Estimated cost: $50–$100/month = $600–$1,200/year

Learn more: HomeWork Solutions

7. Pre-Employment Screening and Background Checks

Most families conduct:

• Criminal background checks

• Driving record checks

• Reference verification

• Drug testing (optional but common if nanny will be driving)

• CPR/First Aid certification (may need to be renewed)

Estimated total cost: $100–$500

Some agencies include this in their fees, but if you hire independently, you’ll need to arrange and pay for it.

Source: Columbus Nannies FAQ

8. Nanny Placement Agency Fees (If Applicable)

Many families turn to nanny agencies for vetting, matching, and onboarding. While effective, these services come at a cost.

• Application or registration fee: $100–$300

• Placement fee: 10–15% of annual salary (often $3,000–$7,000)

• Trial period coverage: Some agencies charge for backup or replacement within 60–90 days

If you’re budgeting for a $50,000/year nanny, expect an agency fee of $5,000–$7,500.

Source: Peacock Parent - Cost of a Nanny

9. Transportation and Mileage Reimbursement

If your nanny drives your kids to school, activities, or errands, the IRS standard mileage rate applies. For 2024, that rate is $0.655/mile.

Let’s say your nanny drives 50 miles/week:

• 50 x 52 = 2,600 miles/year

• 2,600 x $0.655 = $1,703 in annual mileage reimbursement

Some families also reimburse for tolls, parking, or provide a gas stipend.

10. Meals and Child-Related Supplies

Many families provide:

• Snacks and meals during the workday

• Art supplies, educational tools, and play materials

• Diapers, wipes, sunscreen, or first aid supplies for younger kids

While individually minor, these expenses can add $50–$100/month ($600–$1,200/year), especially if you encourage your nanny to plan enriching activities.

11. End-of-Year Bonuses or Gifts

It’s customary to provide an end-of-year bonus or holiday gift. Most families offer:

• One week’s pay as a cash bonus

• Gift cards or childcare-related gifts

• A paid day off around the holidays

While not mandatory, it’s considered standard and shows appreciation.

12. Legal Consultation and Contract Development

You’ll want to create a clear, written contract that outlines:

• Job duties and schedule

• Compensation and benefits

• Discipline philosophy

• Grounds for termination and notice periods

You may also want to consult with a family employment attorney to ensure compliance.

Estimated cost: $300–$800 if using a legal service

Source: Care.com - Why Use a Nanny Contract

Total Hidden Costs: A Realistic Budget

Let’s say you hire a nanny at $25/hour, 40 hours/week:

• Base pay: $52,000/year

• Taxes & insurance: ~$6,000

• Benefits (PTO, health, bonus): $4,000–$6,000

• Payroll software: $1,000

• Mileage/transportation: $1,700

• Extras (meals, supplies, holidays): $1,000–$2,000

True annual cost: $65,000–$70,000+ for a $52,000 salary nanny

Conclusion: Plan Smarter, Not Just Harder

Hiring a nanny in Ohio is an investment in your family’s well-being—but one that should be entered into with eyes wide open. By understanding the hidden costs, families in Cincinnati, Cleveland, and beyond can plan ahead, avoid surprises, and build lasting caregiver relationships.

If you're unsure how to budget for a nanny, need a sample contract, or want help calculating employer taxes, reach out to Hunny Nanny Agency. We support Ohio families through every step of the hiring process.

Additional Resources for Ohio Families:

• GTM - Budgeting for a Nanny

• HomeWork Solutions - Ohio Nanny Payroll Laws

• Ohio Bureau of Workers' Compensation

• IRS Household Employer Tax Guide

• Nanny Lane - Cost of a Nanny in Ohio

• Care.com - Contracts and Hiring

Ready to hire a nanny without the headache? Schedule a consultation with Hunny Nanny Agency. We’ll help you build a budget, define your needs, and find your perfect caregiver match.