District of Columbia Household Employer Guide 2026
Your household employee — a nanny, caregiver, housekeeper, or anyone who works in your Washington, DC home — is a W-2 employee. DC is a high-compliance household-payroll jurisdiction: district withholding for DC residents, unemployment filings, employer-funded Paid Family Leave, workers' comp, paid sick and safe leave, and one of the highest minimum wages in the country.
Start Payroll Free →When the rules apply
DC household employers mainly need to watch federal payroll thresholds plus DC's first-dollar unemployment, withholding, and Paid Family Leave rules.
How Nest Payroll handles this
Each pay period, you pay your employee the net amount directly — through Venmo, Cash App, Zelle, your banking app, or by check. Nest generates the pay stub and calculates federal payroll taxes, DC withholding when applicable, DC unemployment, and the employer-funded DC Paid Family Leave contribution.
Federal taxes — quarterly EFTPS payments
At the end of each federal quarter, Nest debits your bank account for federal taxes owed and remits them to the IRS via EFTPS. At year-end, Schedule H on your Form 1040 reconciles those household payroll taxes.
DC taxes — UC-30, PFL, and withholding
Nest supports quarterly UC-30 unemployment reporting, DC Paid Family Leave employer contributions, and DC withholding returns for DC-resident employees. The DC PFL contribution is employer-paid and may not be deducted from employee wages.
Set up payroll in 5 minutes.
Nest handles DC payroll calculations, paystubs, UC-30 filings, DC PFL employer contributions, withholding support, and year-end Schedule H.
Start Payroll Free →Setup checklist (before they start)
DC Workers' Compensation Insurance — required
Washington, DC requires workers' compensation insurance for nearly all employers, including household employers. Purchase coverage through a licensed DC insurance carrier before the employee starts.
Form I-9 (Employment Eligibility)
Have your employee complete the Form I-9 at hire to verify they're authorized to work in the United States. You don't submit this anywhere — keep it filed in case of audit.
Federal W-4 + Form D-4
The federal W-4 determines federal income tax withholding if you and your employee agree to withhold it. DC uses Form D-4 for district withholding.
Federal income tax withholding is voluntary for household employers — it requires mutual agreement between you and your employee. DC income tax withholding, however, is required for DC-resident employees from day one.
DC Reciprocity with Maryland and Virginia — Form D-4A
DC has reciprocal income-tax agreements with Maryland and Virginia. If your employee lives in Maryland or Virginia and works in DC, they should give you Form D-4A, and you generally do not withhold DC income tax.
DC PFL contributions and DC SUI still apply regardless of the employee's home state — the reciprocity covers only state/district income tax withholding.
DC New Hire Reporting
DC requires all employers to report newly hired and rehired employees to the DC Directory of New Hires within 20 days of the hire date.
You'll provide your employee's name, address, SSN, hire date, and your contact information.
Required Employment Posters
DC requires several employment posters in the workplace. For a household, "the workplace" is your home — but you should still keep a binder with the required notices and confirm with your employee that they've reviewed them. Required posters include:
- DC Minimum Wage poster (DOES Office of Wage-Hour)
- DC Paid Family Leave notice (DOES Office of Paid Family Leave — required for ALL employers)
- DC Accrued Sick and Safe Leave notice
- DC Workers' Compensation notice
- Federal "EEO is the Law" + FLSA Min Wage posters
Note: DC PFL notice violations can incur civil penalties of $100 per covered worker per violation and $100 per day for failure to post in the workplace.
Written Work Agreement
DC does not require a written work agreement for household employment, but having one in writing protects everyone. A good agreement covers: pay rate, hours, schedule, duties, paid time off, holiday pay, sick leave accrual, mileage reimbursement policy, termination process, and confidentiality. Use Nest's free Nanny Contract Template to get started.
Pay & compensation
Minimum Wage — $17.50/hr (highest in the country, CPI-adjusted)
DC's minimum wage is $17.50 per hour as of July 1, 2025 (under D.C. Code § 32-1003, CPI-indexed annually each July 1). The 2026 adjustment will take effect July 1, 2026 based on inflation. DC has a separate tipped minimum wage rate under the District's Tipped Wage Workers Fairness Amendment Act of 2018, but household employees are typically not tipped employees.
Overtime — 1.5× regular pay over 40hr/week
| Worker type | Overtime rule | Source |
|---|---|---|
| Live-out (works at your home but doesn't reside there) | 1.5× regular rate over 40 hours per week | FLSA + D.C. Code § 32-1003 |
| Live-in (resides at your home) | Exempt from FLSA overtime; no DC rule extending overtime to live-in domestic workers | 29 USC § 213(b)(21) |
"No Tax on Overtime" Deduction (2025–2028)
The federal overtime deduction may let household employees deduct the premium portion of qualifying overtime pay on their personal tax return. This is a federal income-tax rule; it does not change how you calculate overtime, FICA, DC withholding, DC PFL, or payroll records.
Pay Frequency
Household employees are usually treated as non-exempt hourly workers under FLSA rules — even when you've agreed to pay a "salary," federal FLSA treats it as a wage covering a fixed number of hours per week, with overtime owed on hours past 40.
Under D.C. Code § 32-1302, DC employers must pay wages at least twice per month, on regular paydays designated in advance. Most household payroll arrangements pay weekly or biweekly to keep cash flow predictable for both sides.
Mileage Reimbursement
DC does not require employers to reimburse mileage at the IRS standard rate, but if you ask your employee to use their personal vehicle for work-related driving (e.g., kid pickups, errands), you should reimburse them. The 2026 IRS standard mileage rate is 70 cents/mile for business use. Reimbursement at the IRS rate is non-taxable income for the employee.
Paystub Requirements
Under D.C. Code § 32-1008, DC employers must provide an itemized wage statement with each paycheck showing: hours worked, hourly rate, gross wages, all deductions (federal income tax, FICA, DC state income tax, SUI), net pay, and pay period dates. The DC PFL contribution is paid by the employer and is NOT shown as an employee deduction on the paystub.
Time off & leave
DC Accrued Sick and Safe Leave Act (ASSLA)
DC requires paid sick and safe leave. For employers with fewer than 25 employees, employees accrue 1 hour per 37 hours worked, capped at 24 hours per year.
DC Paid Family Leave — employer-funded
DC Paid Family Leave applies to employers that pay DC unemployment insurance tax, including household employers. The contribution is 0.75% of covered wages, fully employer-funded, and may not be deducted from employee pay.
Vacation & PTO
DC does not require paid vacation. If you offer it, your written policy should clearly explain accrual, carryover, and payout at separation. If your policy is silent, unused vacation may be treated as payable wages.
Upon departure
DC final pay timing depends on how the relationship ends. For involuntary termination, final wages are generally due by the next working day. For voluntary resignation, final wages are generally due by the next regular payday or within 7 days, whichever is earlier. Pay out unused vacation only if your written policy provides for payout.
Year-end forms
Your responsibilities
- Hand the W-2 to your household employee by January 31 — Nest produces this; you deliver it
- Attach Schedule H to your Form 1040 by April 15 — Nest produces a signature-ready version
What Nest handles for you
- Quarterly federal tax payments to the IRS via EFTPS
- W-3 + Copy A of W-2 filed with the Social Security Administration
- Quarterly Form UC-30 unemployment filings through ESSP
- Quarterly DC PFL employer contributions through ESSP
- FR-900Q / FR-900M withholding filings when DC withholding applies
- Annual FR-900A reconciliation and W-2 state copy when DC withholding applies
Tax breaks for household employers
Three federal tax provisions can offset the cost of household employment:
- Child and Dependent Care Tax Credit (CDCTC) — Up to 35% of $3,000 (one qualifying child) or $6,000 (two or more) in care expenses on Form 2441 with Form 1040.
- Dependent Care FSA (DCFSA) — If your employer offers one, you can set aside up to $5,000 per year (single or married filing jointly) of pre-tax salary to pay for care. The OBBBA increased this to $7,500 starting 2026.
- DC Earned Income Tax Credit (EITC) — DC offers a state-level refundable EITC at 85% of the federal EITC, the most generous in the country, on Form D-40.
Resources & free tools
The information on this page is general in nature and not tax, legal, or financial advice. DC rules change. Verify current rates and rules with DC OTR, DC DOES, and the DC Office of Paid Family Leave, or consult a tax advisor.