Wisconsin Employer Guide

Wisconsin Household Employer Guide 2026

Your household employee — a nanny, caregiver, housekeeper, or anyone who works in your Wisconsin home — is a W-2 employee. Wisconsin is a moderate household-payroll state: graduated state income tax, employer-paid unemployment insurance, Form WT-4 for Wisconsin withholding, no statewide paid leave, no PFML, and workers' compensation generally not required for household employers below the $20,000 annual payroll threshold.

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✓ Updated May 2026 · Verified against Wisconsin Department of Revenue, Wisconsin DWD, Wisconsin Workers Compensation Division, and IRS
State Income Tax3.5%–7.65%
Minimum Wage$7.25/hr
UI Wage Base$14,000
State W-4WT-4
Workers' Comp$20k rule
Wisconsin is moderately simple for household payroll, with one specific quirk to remember. The state has a graduated four-bracket personal income tax with rates of 3.50%, 4.40%, 5.30%, and 7.65% (top). There is no state-mandated paid sick leave, no PFML, and no local income taxes. Workers' compensation is not required for household employers below the $20,000 annual payroll threshold. The notable quirk: Wisconsin does not accept the federal Form W-4 for state withholding purposes — every newly-hired employee must complete a state-specific Form WT-4. The main state-level obligations are quarterly UI contribution and wage reports with the Wisconsin Department of Workforce Development and the annual Form WT-7 reconciliation with the Wisconsin Department of Revenue.
Your household worker is a W-2 employee. Most household workers are employees under IRS rules, not contractors. If you control when, where, and how the work is done, they are generally your W-2 employee. Issuing a 1099 in this situation can lead to back tax penalties, interest, and wage-law liability.

When the rules apply

Wisconsin household employers mainly need to watch the federal payroll thresholds, the $1,000 quarterly Wisconsin unemployment threshold, and the $20,000 annual workers' compensation payroll threshold:

2026 Thresholds
$3,000
Federal · 2026
Cash wages to any one household employee in the year. Triggers Social Security & Medicare (FICA) withholding — 7.65% from your employee, 7.65% from you. (The $2,800 figure used in 2025 increased to $3,000 for 2026.)
$1,000
Federal/quarter
Cash wages to all household employees combined in any calendar quarter. Triggers Federal Unemployment Tax (FUTA) — 6% on the first $7,000 of each employee's wages, with a 5.4% credit for timely state UI tax payments (effective 0.6%). Crossing this also triggers the requirement to register with the Wisconsin DWD for state UI.
$1,000
State/quarter
Cash wages to all household employees combined in any calendar quarter. Triggers Wisconsin state UI tax registration (WI Department of Workforce Development) — 3.05% new-employer rate (small payroll) on the first $14,000 of each employee's wages.

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 Wisconsin DWD.

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.

Wisconsin state taxes — quarterly UI filings

Each quarter, Nest files Form UCT-101-E (Contribution Report) and UC-7823-E (Wage Report) with the Wisconsin Department of Workforce Development for state UI tax — an employer-paid contribution, not withheld from your employee.

Wisconsin UI Tax — 2026 rates: The new-employer rate for non-construction household employers is 3.05% on the first $14,000 of each employee's wages for new employers with payroll under $500,000 (the typical household range) — an employer-paid tax. Schedule D is in effect for 2026. After your first reporting periods, the Wisconsin Department of Workforce Development may reassign you an experience-based rate (range 0%–12%). Nest Payroll calculates and remits this with your quarterly DWD filings. Source: Wisconsin Department of Workforce Development
Wisconsin state income tax — graduated four-bracket (3.50% to 7.65% top): Wisconsin uses a four-bracket graduated income tax with rates of 3.50%, 4.40%, 5.30%, and 7.65% (top). The state withholding certificate is Form WT-4 (Employee's Wisconsin Withholding Exemption Certificate), which uses a personal-allowance system. Important: Per Wisconsin Department of Revenue Publication 166, the federal Form W-4 cannot be used for Wisconsin withholding tax purposes — every newly-hired employee must provide a completed Form WT-4. No local income taxes apply anywhere in Wisconsin. Source: Wisconsin Department of Revenue — Withholding Tax Guide (Pub 166)
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.

Set up payroll in 5 minutes.

Nest handles WI UI registration, paystubs, quarterly Wisconsin DWD filings, and year-end Schedule H — all for $42/mo.

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Setup checklist (before they start)

Wisconsin Workers' Compensation Insurance — voluntary for most households

Under Wis. Stat. § 102.07(5), household employers with annual payroll under $20,000 are exempt from Wisconsin's mandatory workers' compensation coverage. Domestic service in private homes is also generally excluded. You are not required to carry workers' comp for a typical household employee.

However, you can voluntarily elect coverage by purchasing a household-employer workers' comp policy through any licensed Wisconsin insurance carrier. Voluntary coverage shields you from common-law negligence suits if your worker is injured on the job, and gives your employee predictable benefits without litigation.

Without coverage: An injured household worker can sue you in civil court for medical bills, lost wages, and pain & suffering. Most homeowner's insurance policies have limited or no liability coverage for employees injured on the job. Talk to your insurance agent about whether your homeowner's or umbrella policy covers domestic-employee injuries.

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 WT-4 (Wisconsin withholding certificate — required separately)

The federal W-4 determines how much federal income tax to withhold from each paycheck. Wisconsin requires every newly-hired employee to complete Form WT-4 separately — the federal Form W-4 is not acceptable for Wisconsin withholding tax purposes (per Wisconsin Department of Revenue Publication 166). Form WT-4 also serves as Wisconsin new-hire reporting.

Federal and Wisconsin income tax withholding are both voluntary for household employers — each requires mutual agreement between you and your employee.

Wisconsin New Hire Reporting

Report new hires to the Wisconsin New Hire Reporting Center within 20 days of the start date. Wisconsin's Form WT-4 (state withholding certificate) doubles as new-hire reporting. You can file online at the link above. Federal law requires this; WI penalty for failure is up to $25 per missed report.

Required Employment Posters

Even with a single household employee, the following workplace posters are required (or equivalent notification, since your home isn't a typical workplace):

For a household setting, a single binder kept in a common area satisfies the posting obligation in most cases.

Written Work Agreement

Wisconsin does not require a written employment agreement, but it's strongly recommended. A clear written agreement reduces misunderstandings and protects both parties when situations come up that you didn't anticipate.

Use our free nanny contract template as a starting point — it covers compensation, hours, duties, vacation, sick time, confidentiality, and at-will employment language.

Pay & compensation

Minimum Wage — federal floor of $7.25/hr

Wisconsin's minimum wage is $7.25/hr (Wis. Stat. § 104.035), matching the federal floor. There are no local city or county minimum wages in Wisconsin. In practice, household-employer market rates are well above this; nanny pay in Milwaukee, Madison, Green Bay, and Kenosha typically ranges from $15–$22/hr depending on experience and responsibilities.

Overtime — 1.5× regular pay over 40hr/week

Federal Fair Labor Standards Act (FLSA) overtime rules apply: live-out household employees get 1.5× their regular hourly rate for any hours over 40 in a workweek. Live-in household employees are exempt from federal OT (FLSA exemption for live-in domestic workers), and Wisconsin has no state OT requirement that overrides this.

Wisconsin Overtime Rules
Worker typeOT triggerRate
Live-out (most nannies, housekeepers, caregivers)Over 40 hr/week1.5× regular
Live-inFLSA-exempt — no OT required1.0× regular

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

The One Big Beautiful Bill Act (OBBBA, July 2025) created a temporary federal income-tax deduction for overtime premiums earned 2025–2028. Employees may deduct up to $12,500 of qualifying OT premium pay annually ($25,000 if married filing jointly). This is a federal income tax deduction at filing time — it does NOT exempt OT from FICA or state income tax, and it does NOT change paystub withholding. Employers must report the qualifying OT premium portion separately on the W-2 (Box 14 or a designated code). Nest Payroll handles this automatically.

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 Wis. Stat. § 109.03, employers must pay wages at least monthly on regular paydays designated in advance. Most household payroll arrangements pay weekly or biweekly to keep cash flow predictable for both sides.

Mileage Reimbursement

Wisconsin does not have a state-mandated mileage reimbursement rate for private employers. If your employee uses their own car for work-related driving (errands, school pickup, doctor's appointments for the children), reimburse at the federal IRS standard mileage rate — $0.70/mile for 2026. Reimbursements at or below the federal rate are not taxable wages.

Paystub Requirements

Wisconsin does not have a specific statute requiring itemized paystubs, but you should provide them anyway for clear recordkeeping. Each paystub should show: gross wages, hours worked, deductions (federal income tax, FICA, WI PIT), net pay, and pay period dates.

With Nest Payroll: Nest generates a compliant earnings statement (pay stub) for every pay period — automatically. You can email each stub to your employee from the app, or download a PDF.

Time off & leave

Paid Sick Leave — none required statewide

Wisconsin does not have a statewide paid sick leave law. The city of Milwaukee previously attempted to enact a local paid sick leave ordinance, but Wisconsin state law preempts local paid sick leave ordinances under Wis. Stat. § 103.115. Sick time is offered at the employer's discretion.

If you choose to offer sick leave, common household-employer practice is 5–10 days/year, usable for the employee's own illness or to care for an immediate family member.

Vacation & PTO

Wisconsin does not require paid vacation. If you offer it, document the policy in writing — under Wisconsin law, vacation pay is enforceable to the extent your written policy states it will be paid out at separation. A clear policy with a written cap (or "no payout at separation" provision) protects you.

Frontloading at the start of each year is the simplest approach. If you offer paid vacation, set the annual amount upfront and let your employee draw against it as time is used — no per-pay-period accrual tracking, no carryover headaches at year-end. See our frontload PTO & payout guide for the calculation method when payout does apply (earned-but-unused, pro-rated through the last day worked, at the final rate of pay).

Upon departure

When the working relationship ends, Wisconsin's final pay rule (Wis. Stat. § 109.03(2)) requires final wages to be paid on the next regular payday or within one month of the termination, whichever is sooner.

At separation, give your employee a final paystub and a copy of any timekeeping records you've maintained. If you've offered vacation as part of your written policy, pay out the earned-but-unused portion (pro-rated through the last day worked, at the final rate of pay) per your policy.

Year-end forms

By the end of January each year, you'll need to deliver:

  • W-2 to your household employee — for their personal tax return
  • W-3 + Copy A of W-2 filed with the Social Security Administration
  • Schedule H attached to your personal Form 1040 by April 15
  • Quarterly UCT-101-E and UC-7823-E reports with the Wisconsin Department of Workforce Development (handled throughout the year by Nest once you cross the $1,000 quarterly threshold)
  • Form WT-7 (Annual Withholding Reconciliation) filed electronically with the Wisconsin Department of Revenue by January 31
With Nest Payroll: Your tax forms are generated automatically and appear in your Tax Summary by the end of January. We handle W-3 filing with the SSA, Wisconsin DWD quarterly UI filings, and provide a signature-ready Schedule H for your accountant or your own 1040 preparation.

Bonuses, vacation payouts, and other supplemental wages. Nest uses the aggregate method for federal income tax withholding: bonuses, PTO payouts, and other supplemental wage payments are combined with regular wages and withheld at the worker's regular W-4 rate — 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

Two federal tax breaks may help offset your nanny payroll costs:

1. Dependent Care FSA (DCFSA). Through your employer's benefits, you can set aside up to $7,500/year (2026 OBBBA increase from $5,000) in pre-tax dollars to pay for childcare for kids under 13. This typically saves 25–35% on the contributed amount, depending on your federal + state tax bracket.
2. Child & Dependent Care Tax Credit. On your federal Form 1040, claim 20–35% of qualifying childcare expenses (up to $3,000 for one child / $6,000 for two or more). The percentage scales based on your AGI.

For nannies caring for school-aged kids, families often use the DCFSA first (better tax savings for most), then claim the credit on any expenses above the FSA limit. Note: you cannot claim the same expenses under both — but you can split them.

Resources & free tools

🧮 Nanny Payroll Calculator ⏪ Catch-Up Calculator ↗ Gross-Up Calculator 📄 Free Contract Template 🏖️ Frontload PTO & Payout Guide 📚 Nanny Payroll 101

The information on this page is general in nature and not tax, legal, or financial advice. Wisconsin rules change. Verify current rates and rules at Wisconsin Department of Revenue and Wisconsin Department of Workforce Development, or consult a tax advisor.