As we wrap up 2025, many families are taking stock of the year and planning ahead for the holiday season. For household employers, this is an ideal time to recognize the important role your nanny, senior caregiver, or other in-home employee plays in your daily life.
One of the most meaningful ways to show appreciation is with a holiday or year-end bonus. It’s a simple gesture that says: “I see your hard work, and I value it.”
Why Employers Choose to Give a Bonus
A tangible way to say thank you
Caring for children or an aging loved one is no small task. Your household employee likely provides emotional support in addition to their daily responsibilities. A monetary bonus is a direct and thoughtful way to recognize their efforts and dedication.
Bonuses are a common industry practice
While not required, it’s very common for household employees to receive an end-of-year bonus. If your employee has worked for other families before, chances are they’ve become accustomed to them, or at least hope for one.
It helps foster loyalty
Feeling appreciated encourages employees to stay. A year-end bonus along with a kind message, can reinforce the mutual trust and respect that helps build long-term working relationships.
How Much Should You Give?
The right amount varies based on a few key factors:
- Location: In urban areas or high cost-of-living regions, bonuses tend to be on the higher side. The typical range is one to two weeks’ pay.
- Tenure: Employees who have been with your family longer often receive larger bonuses.
- Your employee’s perspective: If you’re facing budget constraints and communicate openly, your employee may be understanding. Just be aware that big changes from previous years, or perceived inconsistency, can lead to confusion or hurt feelings. You can avoid these by simply being upfront and honest.
When possible, try to plan ahead and build the bonus into your annual household employment budget. It makes things easier for you and keeps expectations clear for your employee.
One Important Reminder: Bonuses Are Taxable
While it may feel like a gift, any year-end bonus (including gift cards) is considered taxable income by the IRS. As a household employer, that means it needs to be reported and taxed just like regular wages.
If this is news to you, you’re not alone! Many families are surprised to learn that holiday bonuses come with tax responsibilities.
Need Help with Bonus Pay or Year-End Tax Planning?
At HomeWork Solutions, we’ve been helping families manage household payroll and tax compliance since 1993. Our experts are happy to walk you through the ins and outs of bonus pay, calculate taxes, and ensure everything is handled correctly, so you can focus on enjoying the holidays. We’re just a phone call away (1-800-626-4829) if you have questions. Or if you prefer, book a complimentary consultation with one of our household payroll specialists.
Giving a year-end bonus is more than just tradition, it’s a meaningful way to celebrate the partnership between your family and the person who helps your household thrive. A little recognition goes a long way.