Savvy Nanny Payroll Services has got your back for Local Payroll Taxes
I know, I know. Just when you start wrapping your head around the fact that you need to pay State and Federal payroll taxes for your household employee, yet another tax pops up. An increasing number of municipalities have enacted local payroll taxes, some of which affect household employers.
In this post, we’ll break down what local payroll taxes are, how they affect household employers, and what you need to do to stay on the right side of the law.
What Are Local Payroll Taxes?
Local payroll taxes are taxes imposed by cities, counties, or other local jurisdictions. Unlike federal and state taxes, which apply across broad regions, local payroll taxes are specific to certain municipalities. These taxes are typically designed to generate revenue for local services, such as public transportation, health programs, and infrastructure.
Some common examples include:
- San Francisco Payroll Expense Tax
- New York City’s Metropolitan Commuter Transportation Mobility Tax (MCTMT)
- Philadelphia Wage Tax
- Denver’s Occupational Privilege Tax
These taxes can apply to employers, employees, or both—depending on the jurisdiction.
Do Household Employers Need to Pay Local Payroll Taxes?
In many areas, yes. If you employ someone in your home and the local jurisdiction levies payroll or wage taxes, you may be required to:
- Register with the local tax authority
- Withhold local taxes from your employee’s pay
- Pay an employer-side tax
- File regular reports and make timely payments
For example, in Philadelphia, household employers must withhold the city’s Wage Tax from their employees and remit it to the city. In San Francisco, the Payroll Expense Tax might apply if your total compensation paid crosses a certain threshold.
How Local Payroll Taxes Affect You as a Household Employer
Here are the key ways local payroll taxes may affect you:
- Increased Employment Costs
If your locality requires an employer-side payroll tax, you’ll need to factor that into your overall employment budget. - More Administrative Burden
Local taxes may require separate registrations, filings, and payment schedules that are different from federal and state requirements. - Compliance Risk
Because local payroll taxes aren’t always well-publicized or included in popular tax software, it’s easy to overlook them—leading to fines, penalties, or audits. - Employee Paychecks May Be Affected
Some local taxes are withheld from employees’ wages, reducing their take-home pay. Clear communication is key to avoiding misunderstandings.
What Should You Do as a Household Employer?
Here’s a simple checklist to help you stay compliant with local payroll tax requirements:
✅ Check Local Requirements
Research whether your city or county imposes payroll or wage taxes that apply to household employers.
✅ Register if Required
If a local tax applies, you may need to register your household as an employer with the local tax authority.
✅ Withhold and Remit Taxes
Ensure that you’re properly withholding any employee-side taxes and paying employer-side taxes on time.
✅ File Required Returns
Localities may have quarterly or annual reporting obligations.
✅ Get Help if You Need It
Navigating local taxes can be tricky, especially when layered with federal and state obligations.
Still Reading? Do you want the good news?
Savvy Nanny Payroll Services takes the local household payroll burden off your back. You will not need to research whether your municipality calls it a payroll tax, a city service fee, a transportation district service tax, or a school district income tax. You will not need to navigate local government websites hoping you can pay easily online. You will not need to calculate anything. Savvy Nanny Payroll Services withholds ALL local taxes you are required to pay and remits almost all local taxes except in rare cases where we cannot. This is a powerful flex that not every household payroll service has. As usual, Savvy Nanny is on the case and taking care of the details so you don’t have to.