Virginia Employer Guide

Virginia Household Employer Guide 2026

Your household employee — a nanny, caregiver, housekeeper, or anyone who works in your Virginia home — is a W-2 employee. Virginia household payroll includes state income tax withholding, unemployment filings through the VEC, and a new Paid Family & Medical Leave program beginning in 2028.

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✓ Updated May 2026 · Verified against VA Department of Taxation, Virginia Employment Commission (VEC), VA Department of Labor and Industry, and IRS
State Threshold$1,000/qtr
Minimum Wage$12.77/hr
SUI Rate2.5%
Workers' Comp3+ employees
PFML Starts2028
Your household worker is a W-2 employee. Whether they're a nanny, caregiver, housekeeper, gardener, or personal assistant — if you control when, where, and how the work is done, they are your employee under IRS rules. That means W-2 reporting, payroll tax compliance, and Virginia labor law obligations. Most household workers are employees under IRS rules, not contractors — issuing a 1099 in this situation can lead to back tax penalties, interest, and wage-law liability under both federal and Virginia law.

When the rules apply

Each tax threshold is a trigger. Once you cross one, the corresponding taxes apply to the wages that triggered the crossing — not just the amount above the threshold. Virginia household employers face federal triggers, plus state UI tax and state income tax withholding.

Federal thresholds
$1,000
per quarter
Cash wages to all household employees combined. Triggers: pay federal Unemployment Tax (FUTA — 6% on the first $7,000 per employee, with state credit). Report on Schedule H with your 1040.
$3,000
per year, per employee
Cash wages to a single household employee in the calendar year. Triggers: withhold and pay FICA (Social Security 6.2% + Medicare 1.45%). Report wages to the Social Security Administration via W-2 and W-3.
Virginia state thresholds
$1,000
per quarter
Cash wages to all household employees combined. Triggers: register with the Virginia Employment Commission (VEC) and pay state Unemployment Insurance (employer-paid). State income tax withholding is optional for household employers (see W-4 / VA-4 below) — if you and your employee elect to withhold, you also register with the VA Department of Taxation.
3+
employees
Workers' compensation insurance trigger. Virginia requires workers' compensation coverage when an employer "regularly employs" three or more workers. With 1–2 employees (typical household setup), coverage is optional but recommended.

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. We calculate accurate withholdings on every pay stub from day one. Once you cross the $1,000 quarterly threshold, we register you with the VEC and the VA Department of Taxation.

Federal taxes — quarterly EFTPS payments

At the end of each federal quarter (March, May, August, December), Nest debits your bank account for the federal taxes owed — FUTA, employer + employee FICA, and any federal income tax withheld — and remits them to the IRS via EFTPS. You'll get a confirmation email a week beforehand. Your money stays in your account until taxes are actually due. We don't hold withholdings on your behalf. At year-end, Schedule H on your Form 1040 reconciles everything Nest already paid through the year; Nest produces a signature-ready version.

Virginia state taxes — annual VA-6H + quarterly VEC filings

Virginia gives household employers a simpler filing schedule than other employers — a single annual reconciliation for state income tax withholding (Form VA-6H, due January 31), plus the standard quarterly UI filings with the Virginia Employment Commission (VEC-FC-20/21). Nest handles both: we accumulate withheld amounts through the year and submit VA-6H end-of-year, and we file VEC FC-20/21 each quarter. State income tax withholding is technically optional for household employers — Nest defaults to withholding both federal and VA PIT, but you can disable VA withholding in your account if you and your employee prefer (in which case your employee makes VA estimated payments via Form 760ES).

Virginia UI Tax — 2026 rates: The new employer rate is 2.5% on the first $8,000 of each employee's wages — an employer-paid tax. After your first reporting periods, the VEC may reassign you an experience-based rate ranging from 0.1% to 6.2%. Nest Payroll calculates and remits the UI tax with your quarterly VEC-FC-20/21 filings. Source: Virginia Employment Commission — Employers
Heads-up — VA UI administrative fee: As of January 1, 2025, Virginia also collects a 0.05% administrative fee on taxable UI wages (alongside the SUI tax above). This fee is on the VEC's quarterly returns starting in 2025; we'll roll it into Nest Payroll's quarterly remittance ahead of the next filing cycle so it's in line with what VEC expects.
Virginia state income tax withholding: Virginia household employers can withhold state income tax using Form VA-4. Nest supports Virginia withholding and annual Form VA-6H reconciliation automatically. Employees who live in DC, KY, MD, PA, or WV may qualify for reciprocity and exemption from Virginia withholding. Source: Virginia Department of Taxation
End-of-year reconciliation: If you didn't cross the federal FICA threshold ($3,000/year per employee — most common when families start payroll late in the year or hire short-term help), we'll let you know exactly what was withheld but doesn't need to be remitted. You return those amounts to your employee, and we file accordingly.

Setup checklist (before they start)

The one-time tasks that need to be done before — or shortly after — your household employee's first day.

Workers' Compensation Insurance

Virginia's Workers' Compensation Act applies once an employer "regularly employs" three or more workers. Most households (1–2 employees) fall below this threshold and are not legally required to carry coverage. Larger households — or those with multiple part-time workers (housekeeper + nanny + gardener) — may cross it.

Even when not required, we strongly recommend obtaining coverage. Workers' comp protects you from liability if your employee gets injured or sick on the job. Without it, you could be personally liable for medical expenses, lost wages, and potential lawsuits arising from a workplace injury.

Two paths to coverage

  • Homeowner's or renter's insurance rider — call your insurance company first. Many policies include or can add household-employee coverage as a low-cost rider.
  • Standalone household-employer policy — available from private carriers if your homeowner's policy can't cover it.
Resource: Virginia Workers' Compensation Commission — official guidance on coverage requirements, exemptions, and how to obtain a policy.

Form I-9 (Employment Eligibility)

Federal law requires all employers to verify employment eligibility using Form I-9. Complete this before your household employee's first day of work.

Important: Don't submit the I-9 to anyone. Keep it with your employer records in case of a future audit.

Federal W-4 and Virginia VA-4

The federal W-4 determines how much federal income tax to withhold from each paycheck. Virginia also requires a Form VA-4 (Employee's Virginia Withholding Exemption Certificate) for state income tax withholding. Have your household employee complete both at hire.

Reciprocity for DC/KY/MD/PA/WV residents: If your employee is a legal resident of DC, Kentucky, Maryland, Pennsylvania, or West Virginia and commutes to work in Virginia, they can file Form VA-4 claiming full exemption from VA withholding. Their home state will tax their wages instead. They still need to file the VA-4 even when claiming exemption.
Both federal and Virginia income tax withholding are voluntary for household employers. Each requires mutual agreement between you and your employee. If you both choose to skip state withholding, your employee makes their own VA estimated payments via Form 760ES.

Virginia New Hire Reporting

Under Virginia Code § 63.2-1946, all employers — including household employers — must report newly hired and rehired employees to the Virginia New Hire Reporting Center within 20 days of the hire date. The statute explicitly covers household and domestic employees.

Reporting can be done online (24/7), by FTP, fax, or mail. You'll provide your employee's name, address, SSN, hire date, and your contact information.

With Nest Payroll: We handle Virginia new-hire reporting automatically when you add your employee in the app.

Required Employment Posters

Virginia employers must provide certain notices to their workers. For a household employer with a single employee, you can satisfy this by emailing or texting links, or printing physical copies:

📋 VEC Notice (English) 📋 VEC Notice (Spanish) 📋 DOLI Required Postings 📋 Federal Minimum Wage (FLSA)

Written Work Agreement

Virginia doesn't require a written employment agreement for household workers, but a written contract prevents misunderstandings about hours, duties, PTO, and house rules.

Build a free contract with our editable template: Nest Payroll Household Employee Contract Builder — fill it out and download as a PDF.

Hand In Hand, a non-profit supporting domestic employers and employees, also offers free sample contracts and guidebooks.

Pay & compensation

Everything that goes into a paycheck — minimum wage, overtime, when to pay, pay stubs, and reimbursable mileage.

Minimum Wage — $12.77/hr (2026), rising to $15 by 2028

Virginia's minimum wage is $12.77/hour for all of 2026. Governor Spanberger signed legislation in April 2026 putting Virginia on a final two-step staircase to $15.

Virginia Minimum Wage Schedule
Effective DateRate
January 1, 2026 – December 31, 2026$12.77/hr
January 1, 2027$13.75/hr
January 1, 2028$15.00/hr
January 1, 2029 onwardCPI-indexed annually
Practical note: Most Virginia household employees are paid above the minimum because the local market for nannies, caregivers, and housekeepers commands higher rates — particularly in NoVA (Arlington, Fairfax, Alexandria), Richmond, and the Tidewater region, where common nanny rates run $20–$28/hr. Sources: VA DOLI — 2026 Minimum Wage · EPI Minimum Wage Tracker

Overtime

Virginia follows the federal Fair Labor Standards Act (FLSA) standard for household worker overtime: 1.5× the regular hourly rate for all hours worked over 40 in a 7-day workweek. Virginia briefly had its own stricter Overtime Wage Act (VOWA) in 2021–2022, but HB 1173 (effective July 1, 2022) repealed those provisions and realigned VA with the FLSA.

Virginia Overtime — Household Workers
ConditionRate
Live-out, more than 40 hours in a workweek1.5× hourly
Live-in employees (any hours)Exempt from overtime
Work performed on a holiday or weekendNo premium required
Live-in exemption: Under federal FLSA — which Virginia now follows — live-in domestic workers are exempt from overtime requirements. Live-in nannies and caregivers must be paid at least minimum wage for all hours worked, but overtime is not legally required. This is a meaningful difference from states like California, New York, and Maryland, which require overtime for live-in workers. Source: U.S. DOL — Fair Labor Standards Act

"No Tax on Overtime" Deduction (2025–2028)

Under the One Big Beautiful Bill Act (OBBBA), signed July 2025, your household employee may be able to deduct the premium portion of their overtime pay — the "half" in time-and-a-half — from their federal taxable income.

OBBBA Overtime Deduction — Key Details
DetailValue
What's deductibleOnly the premium (0.5×) portion of FLSA overtime
Max deduction (single)$12,500/year
Max deduction (joint)$25,000/year
Income phaseout$150,000 MAGI ($300,000 joint)
DurationTax years 2025–2028
Good news for Virginia employers: Because Virginia overtime follows the federal FLSA standard (40 hours/week), virtually all overtime your household employee earns qualifies for the OBBBA deduction. Source: IRS — OBBBA Tax Deductions
W-2 reporting (starting 2026): Employers must separately report qualified overtime compensation on Form W-2 using Box 12, code "TT." This is a new requirement — for tax year 2025, employers were given transitional relief from this reporting.

Pay Frequency

Household employees are virtually always hourly under federal FLSA — even when you've agreed to pay a "salary," it's treated as a wage covering a fixed number of hours per week, with overtime owed on hours past 40. Under Virginia Code § 40.1-29, hourly employees must be paid at least every two weeks or twice per month — monthly pay is not permitted. Common household schedules:

  • Weekly — every Friday, the most common cadence for nannies and caregivers
  • Bi-weekly — every other Friday
  • Semi-monthly — 1st and 15th, or 15th and end-of-month

Designate your regular payday in writing at hire — even a simple email or text confirming "you'll be paid every Friday" satisfies this.

With Nest Payroll: Nest defaults to weekly pay stubs, which satisfies VA's minimum cadence and gives you flexibility on the bank-transfer schedule. The weekly pay stub is your record of what was earned; the bank transfer is whenever you want to move the money — as long as the actual transfer follows the regular payday cadence you designated at hire. Source: VA Code § 40.1-29 — Time and Medium of Payment

Mileage Reimbursement

Virginia doesn't require mileage reimbursement, but you must reimburse necessary work-related driving expenses if those costs would otherwise reduce your employee's wages below the minimum wage. Most employers use the IRS standard rate:

$0.725 per mile (2026)

Common examples: driving children to activities, running household errands, taking a client to medical appointments. (Commuting to/from work doesn't count.)

Paystub Requirements

Under Virginia Code § 40.1-29(C), employers must provide each employee with a written statement, on each regular pay date, showing: the name of the employer; the dates of the pay period; the gross wages earned; the deductions; and the net wages. Records must be retained for at least 3 years.

With Nest Payroll: Nest generates a compliant earnings statement (pay stub) for every weekly pay period — automatically. Each stub shows the rate, gross wages, FICA, federal income tax (if elected), VA state income tax, net pay, and hours worked. You can email each stub to your employee directly from the app, or download a PDF.

This is a lot to track on your own.

Nest Payroll handles federal and VA payroll, VA-4 withholding, W-2s, and Schedule H — starting at $42/mo. 14-day free trial.

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Time off & leave

Virginia does not have a state-mandated paid sick leave law that applies to household employees, and there are no city-level sick leave ordinances. However, Virginia's brand-new Paid Family & Medical Leave (PFML) program launches in 2028 — covered below.

Paid Sick Leave

Virginia has no statewide paid sick leave law that applies to private-pay household employees. The state's Healthcare Worker Sick Leave Act (2021) requires paid sick leave only for home health workers serving Medicaid consumer-directed services recipients — it does not apply to private-pay household nannies, caregivers, or housekeepers.

Even though sick leave isn't required for typical household employment, offering some is good retention practice. A typical household employer offers 3–5 paid sick days per year.

If you offer sick leave: frontload, don't accrue

If you do offer sick leave, the simplest approach is frontloading — give your employee the full annual amount upfront at the start of each year (or pro-rated at hire). This avoids tracking accrual rates and unused-time reconciliation. Two universal advantages of frontloaded sick leave:

  • No accrual tracking. No per-hour rate to monitor.
  • No payout at separation. Frontloaded statutory sick leave doesn't have to be paid out when the employee leaves — that's true universally, in every U.S. state. Same applies to a voluntary sick leave benefit you offer in Virginia, if your written policy makes the no-payout rule clear.
How Nest Payroll handles this: Nest is built around the frontloading model — you set up your employee with their annual sick leave balance at the start of each year (or pro-rated at hire), and pay stubs reflect the running balance as time is used. This is the simplest and lowest-risk approach for household employers.
Heads-up if you employ a Medicaid CDS caregiver: If you (or a family member you're caring for) receive home-health services through Virginia's Medicaid consumer-directed services program, the Healthcare Worker Sick Leave Act does apply to that worker — they're entitled to 1 hour of paid sick leave per 30 hours worked (max 40 hours/year), if they average 20+ hours per week or 90+ hours per month. This is a separate arrangement from a privately-paid household employee. Source: VA Code Article 2.1 — Paid Sick Leave (Healthcare Workers)

Vacation & PTO

Virginia does not require paid vacation. If you offer it, document your policy in writing — Virginia law doesn't require payout of unused vacation at separation unless your written agreement says it will be paid out. To preserve flexibility, state your vacation policy explicitly in your work agreement.

This is the policy-default rule with forfeiture allowed: silent policy = whatever Virginia case law decides; clear written policy = whatever you wrote. Virginia is one of the states where you can adopt a "use it or lose it" or no-payout-at-separation policy, provided it's clearly documented in writing at hire.

For any portion of vacation that does have to be paid out under your policy, the calculation is the earned-but-unused portion through the last day worked, at the final rate of pay. Vacation accrues pro-rata as labor is performed — even when frontloaded.

Edge cases worth knowing:
  • Keep sick separate from vacation. If you combine sick and vacation into a single "PTO" bank, the entire balance gets characterized as vacation under your written policy — and if your policy says vacation is paid out, you'll owe the full combined balance. Tracking sick separately preserves the option to handle it differently.
  • Document forfeiture explicitly if that's your intent. A silent policy can leave the question open. If you want unused vacation to forfeit at year-end or separation, write that into your work agreement at hire — don't rely on silence.
  • Vacation pays pro-rata, not the full balance. If your policy provides for payout and you frontloaded 80 hours on January 1, your employee leaving June 30 has earned 40 hours pro-rata (not 80). Subtract any used hours from the earned portion to get the payable amount.

See our Frontload PTO Payout guide for the full pro-rata framework, worked example, and tax treatment.

Virginia Paid Family & Medical Leave (launching 2028)

Virginia became the first Southern state to enact paid family and medical leave when the General Assembly passed PFML in 2026. Coverage applies to nearly all private employers, including household employers.

VA PFML Timeline
DetailValue
Premium rates announcedBy October 1, 2027 (rate not yet set)
Contributions beginApril 1, 2028
Benefits beginDecember 1, 2028
Length of leaveUp to 12 weeks per year
Administered byVirginia Employment Commission (VEC)

What VA PFML will provide (starting Dec 2028): Up to 12 weeks of partial wage replacement for: serious health conditions, bonding with a new child, caring for a family member, or military safety leave.

What this means for household employers: Virtually all household employers qualify as "small employers" (10 or fewer employees). Under the small-employer rule, the employer is exempt from paying their share of the premium — but you still must withhold the employee's share (50% of the total) and remit it. You can voluntarily pay the full premium as an employee benefit. Larger employers (more than 10 employees) split the premium 50/50 between employer and employee.
Action items as 2027 approaches:
  • Watch for VEC to publish the premium rate by October 1, 2027
  • Watch for VEC registration to open in late 2027 or early 2028
  • Notify your employee about VA PFML rights at hire (template forthcoming from VEC)
Source: VEC — Virginia Enacts Paid Family & Medical Leave
With Nest Payroll: When VA PFML contributions begin April 1, 2028, your pay stubs will include the PFML deduction. We'll roll out the calculation logic ahead of that start date so it's in place when contributions begin. Quarterly wage and hour reports are already part of our standard VA compliance. You handle VEC PFML registration directly when it opens.

Upon departure

Final wages: Under Virginia Code § 40.1-29(A.1), all wages owed to a separated employee — whether terminated or resigning — must be paid on or before the date on which they would have been paid had their employment not been terminated (i.e., the next regular payday for the pay period in which separation occurred).

Earned-but-unused vacation: Virginia does NOT require payout of unused vacation or sick time unless your employment contract or written policy specifies it. If your policy provides for payout, calculate the earned-but-unused portion pro-rata through the last day worked at the final rate of pay. Frontloaded statutory sick leave doesn't have to be paid out (universally true, every state). See Vacation & PTO above and our Frontload PTO Payout guide for details.

Final W-2: Provide the federal Form W-2 by the regular January 31 deadline (or earlier if requested by the former employee).

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 — Schedule H reconciles the federal taxes Nest already paid quarterly through EFTPS; Nest produces a signature-ready version

What Nest handles for you

  • Quarterly federal tax payments to the IRS via EFTPS (FUTA, employer + employee FICA, federal income tax withheld)
  • W-3 + Copy A of W-2 filed with the Social Security Administration
  • Form VA-6H annual VA withholding reconciliation, due January 31 (when VA withholding is on)
  • Quarterly VEC-FC-20/21 filings with the Virginia Employment Commission for SUI
  • Starting 2028: VA PFML quarterly contribution reporting added to VEC filings
With Nest Payroll: Your tax forms are generated automatically and appear in your Tax Summary by the end of January.
Bonuses, vacation payouts, and other supplemental wages. Nest uses the aggregate method for both federal and Virginia income tax withholding: bonuses, PTO payouts, and other supplemental wage payments are combined with regular wages and withheld at the worker's W-4 rate (federal) and VA-4 rate (Virginia, applied to VA's progressive 2%–5.75% brackets) — not the flat 22% federal supplemental rate. For most household workers, this produces a slightly larger net check than the flat method would.

Tax breaks for household employers

Paying your household employee legally unlocks meaningful federal tax breaks that often offset most of your employer-side payroll tax cost.

Dependent Care FSA (DCFSA)

For 2026, the federal max contribution is $7,500 (married filing jointly) — up significantly from prior years under the OBBBA. Note: your employer's specific plan may still cap at $5,000.

Child & Dependent Care Tax Credit

Up to 50% of qualifying care expenses for 2026 — up from 35% in 2025. Capped at $3,000 of expenses for one qualifying child or $6,000 for two or more. At the 50% rate, a family with two or more dependents could receive a credit of up to $3,000.

→ See our complete guide to nanny tax breaks — includes DCFSA, Care Credit, EAP (Educational Assistance Program), and ICHRA (health reimbursement).

Resources & free tools

🧮 Payroll Calculator 🧮 Gross-Up Calculator 🧮 Tax Catch-Up Calculator 📄 Free Contract Builder 💡 Tax Breaks Guide 📅 2026 Tax Update 📖 Household Payroll 101 ⏰ Catch-Up on Back Taxes 📊 All 50 State Guides 🤝 How to Hire a Nanny

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Disclaimer: The information on this page is general in nature. This is not tax, legal, benefits, financial, or HR advice. Rules and regulations change over time and vary by location. Workers' compensation, the upcoming Virginia PFML program, and reciprocity rules can be complex — consult an attorney, financial advisor, or licensed insurance broker for your specific situation.