When you welcome a nanny into your home, you're inviting someone to play an important role in your family's life. Offering benefits is a wonderful way to show your nanny just how much you value their care, dedication, and professionalism.
Not only can providing benefits help you build a strong, lasting relationship with your nanny, it’s quickly becoming the standard in today’s household employment market. If you’re working with a nanny agency, it’s a great idea to ask them what types of benefits families in your area are currently offering. They can help you stay competitive and ensure your nanny feels supported from the very start.
Why Offering Benefits Is a Win-Win
Providing benefits creates a foundation of mutual respect, trust, and loyalty. Families who offer thoughtful benefits often find that their caregivers are happier, more engaged, and more committed for the long term.
Here’s a closer look at some tax-advantaged benefits you might consider offering:
- Mileage Reimbursement
If your nanny uses their own car to shuttle your children to and from activities, school, or errands, reimbursing for mileage should be standard practice. The IRS-approved reimbursement rate for 2025 is 70 cents per mile, and the best part? It’s tax-free! Free apps like Mileage Pad make it easy for your nanny to track their mileage accurately.
- Health Insurance Contributions
Helping with health insurance is one of the most meaningful benefits you can provide. In 2025, you can reimburse up to $6,350 for an individual plan or $12,800 for a family plan, all tax-free, if a few simple rules are followed. It's a powerful way to show you care about your nanny's well-being — and their family’s too.
- Transportation Benefits
If your nanny uses public transit or pays for parking during their workday, you can offer a transportation allowance — up to $325 per month tax-free for transit and up to $325 per month for parking expenses. More information can be found here.
- Educational Assistance
Supporting your nanny’s professional growth is a beautiful investment in both their future and your children's care. You can provide up to $5,250 per year in tax-free educational assistance, whether it’s for early childhood education, certifications, or courses that build new skills.
- Cell Phone Reimbursement
Since your nanny likely uses their phone for work-related communication and coordination, offering a partial reimbursement for their cell phone usage is both practical and appreciated.
Setting Your Family Up for Success
If you choose to offer benefits — and we truly hope you do — it’s important to put everything in writing as part of your nanny’s work agreement. Clear communication about benefits builds trust and ensures everyone is on the same page from the very beginning.
While offering benefits may add to your overall employment costs, it can decrease your employer tax liability while also increasing loyalty, stability, and peace of mind. Families who invest in their nanny’s well-being often find they receive so much more in return: a happy, engaged caregiver who feels valued by your family.
Looking for more guidance?
Reach out to HomeWork Solutions! With over 30 years of experience helping families navigate household payroll and tax compliance in all 50 states, we’re here to make your nanny onboarding experience smooth, compliant, and stress-free — so you can focus on what matters most, your family.