This blog post was updated October 2024

Building A Nanny Compensation Package

Searching for a nanny, even when using an agency’s help, can be a time-consuming and stressful process – which is why, once you meet the nanny you’ve been dreaming about and are ready to make them a formal job offer, you want it to be as competitive and enticing as humanly possible to make it easy for them to say yes to!

As families seek out experienced, dedicated nannies, offering a competitive compensation package is more important than ever. However, building the right package is about more than just offering the highest hourly rate. To meet and retain your ideal new employee, it’s crucial to offer a holistic package that includes not only wages but also thoughtful benefits that address the nanny’s financial and personal well-being.

By thinking beyond the hourly rate, families can provide benefits that go further in supporting the nanny’s lifestyle while minimizing employment taxes. Here, we’ll guide you through how to craft a compensation package that will not only excite top-tier candidates but also meet your family’s needs.

Compensation Beyond the Paycheck: The Basics Nannies Expect

When building your compensation package, focusing solely on hourly pay is easy. However, families who take the time to offer more than just a competitive wage are often the ones who land the most engaged, reliable nannies. While the hourly rate is certainly important, it’s not the only factor that experienced candidates consider when choosing a role. Providing essential benefits—such as health insurance, mileage reimbursement, paid time off, and more—can make a significant difference in attracting and retaining top-tier talent.

These benefits aren’t just “extras”; they are the building blocks of a comprehensive compensation package that supports your nanny’s well-being, helps prevent burnout, and makes your family stand out. Offering these basics signals that you value your nanny’s contribution and are invested in a long-term partnership. Additionally, many of these benefits can be structured to save on taxes for both your family and your nanny, making your compensation budget go further.

Paid Time Off and Vacation Flexibility

Providing paid vacation time, sick days, and personal days is a fundamental part of any strong compensation package. Offering paid time off shows that you respect your nanny’s need for rest and personal time, which is key to preventing burnout and ensuring they can remain focused and energized in their role.

It’s also essential to offer flexibility in scheduling time off. Instead of rigidly splitting vacation weeks between you and the nanny, collaborate to find vacation schedules that work for both parties. Some families also extend flexibility by allowing nannies to take personal time during family vacations, creating a balanced approach to time off. Flexibility in paid time off helps foster a sense of partnership and trust, ensuring your nanny feels valued and supported.

Mileage Reimbursement: Covering the Costs of Transportation

If your nanny will be using their personal vehicle for job-related tasks, mileage reimbursement should be a standard part of the compensation package. Covering these costs, whether for school drop-offs, running errands, or attending activities, ensures that the nanny isn’t financially burdened by work-related travel.

Mileage reimbursement is a tax-free benefit, with the IRS setting a standard rate each year (currently $0.56 per mile). This can quickly add up to significant savings for the nanny without additional tax implications for your family. In some states, like California, Illinois, and New York, providing this benefit is a legal requirement. Including mileage reimbursement shows that you are attentive to the day-to-day responsibilities of the job and committed to supporting your nanny’s financial well-being.

Health Insurance: A Vital Benefit

Health insurance is one of the most sought-after benefits in today’s nanny job market. Offering this benefit demonstrates that your family is committed to the long-term well-being of your nanny, making it an essential part of the compensation package, especially for full-time roles.

There are multiple ways to provide health insurance. Some families purchase coverage directly through the Small Business Health Options Program (SHOP) where available, but many opt for more flexible reimbursement options. Qualified Small Employer Health Reimbursement Arrangements (QSEHRA) and Individual Coverage Health Reimbursement Arrangements (ICHRA) allow families to reimburse nannies for their health coverage tax-free. This option offers financial benefits for both parties by reducing income and FICA taxes while giving the nanny the freedom to select a plan that best fits their needs.

Including health insurance or health reimbursement in your package is more than a perk—it’s a fundamental part of attracting experienced and dedicated nannies who are looking for stability and care in their workplace.

Fringe Benefits: Elevating Your Compensation Package

Many of the basic benefits we talked about earlier fall into the category of fringe benefits. But here’s the thing—beyond the basics, there’s a lot more you can offer to take your compensation package from “standard” to “wow.” These fringe benefits aren’t just nice-to-haves; they’re your secret weapon for showing your nanny you truly value them—without breaking the bank on extra taxes for either side.

Fringe benefits go beyond just the paycheck and health insurance. They’re a way to show your nanny you’re invested in their well-being, their future, and their everyday happiness. Plus, they’re a great way to sweeten the deal while keeping things cost-effective for you. Here are a few fringe benefits you might want to consider adding to your offer to really make it stand out.

Educational Assistance: Invest in Their Growth (And Your Kids Will Benefit, Too!)

Let’s talk about helping your nanny keep growing because a nanny who’s passionate about learning is a nanny who’s always bringing something new to the table for your kids. Offering educational assistance—covering the cost of classes, tuition, books, or certifications—sends a clear message that you’re invested in their professional journey.

You can reimburse up to $5,250 per year without anyone having to pay taxes on it. And here’s the cherry on top: Under the CARES Act, you can even help with student loan repayment (also tax-free!) until January 1, 2026. That’s a big deal, especially for candidates juggling student loans. You’ll be offering more than just a job—you’re helping them grow in their career, and that’s something nannies remember.

Retirement Contributions: Show You’ve Got Their Back—Long-Term

Let’s be real—retirement might not be the first thing a nanny thinks about when they’re choosing a new job, but it’s definitely something they’ll appreciate when you offer it. And you don’t need to be a corporate giant to give your nanny the peace of mind that comes with a retirement plan.

You can set up a SEP IRA or SIMPLE IRA and contribute to their retirement fund. Not only does this help your nanny plan for the future, but it’s also tax-savvy for you—these contributions aren’t subject to FICA taxes, meaning savings for both of you. And you get to decide how much to contribute, so it’s flexible. Offering retirement shows you care about their long-term security, which really makes your role stand out.

Lifestyle Perks: It’s the Little (Tax-Free) Things

While we’re on the subject of fringe benefits, let’s talk about those little perks that make life easier. Covering transportation costs like public transit passes, mileage, or parking can be a game-changer for your nanny’s daily routine. And here’s the kicker—it’s all tax-free, for both of you.

You can also think outside the box. Maybe you offer wellness reimbursements for gym memberships or fitness classes, or give them access to a company credit card for work-related expenses so they’re not stuck fronting costs for your kiddo’s activities. These little touches go a long way in making your nanny feel supported and appreciated in the day-to-day grind.

The Bottom Line

Fringe benefits are about more than just tax savings—they’re about creating a package that shows your nanny you care. From helping them build their career to making their life a little easier, these extras set the tone for a positive, long-term working relationship. When you invest in your nanny’s well-being and future, you’re not just hiring a caregiver—you’re building a partnership that benefits everyone, especially your family.

Creating a Comprehensive Package that Stands Out

By offering a thoughtful compensation package that goes beyond the hourly rate, you are building a relationship based on mutual respect and support. A package that includes competitive wages, health insurance, educational assistance, and retirement contributions sends a clear message to the nanny: your family values their hard work and is invested in their well-being. But to truly stand out in today’s competitive market, families need to go further, offering perks that elevate the nanny’s quality of life while also meeting your household’s needs.

Here’s how you can craft a package that not only attracts top-tier candidates but also fosters long-term loyalty and engagement.

Going Beyond the Basics: Adding Value with Perks

Competitive wages and standard benefits like healthcare are essential, but let’s be real—the extras are what can make your offer irresistible. Perks show that you’re thinking about your nanny’s life as a whole, and that you’re committed to making their work environment not just a job, but a place where they feel appreciated and supported.

Here are some ways to add those thoughtful perks that go beyond the basics:

Bonuses and Performance-Based Incentives: Sweetening the Deal

Everyone loves a little extra acknowledgment, especially when it’s tied to hard work. Performance-based bonuses are a great way to reward your nanny for going above and beyond. Whether it’s a bonus for hitting milestones, keeping everything running smoothly during a busy season, or even just a holiday thank-you, these incentives show that you see and value their contributions. It’s not just about money—it’s about saying, “We see how much you do, and we appreciate it.”

And don’t forget about sign-on bonuses. If your dream nanny is juggling multiple offers, a one-time sign-on bonus could be the thing that gets them to choose you. It’s a way of saying, “We really want you on our team,” right from the start.

Wellness and Self-Care Stipends: Prioritizing Your Nanny’s Well-Being

It’s no secret that a happy, healthy nanny means better care for your children, so why not show you’re invested in their well-being? Offering a wellness or self-care stipend is a thoughtful way to help your nanny maintain a healthy work-life balance. This could cover everything from gym memberships and yoga classes to therapy sessions or even a relaxing spa day. It’s more than just a nice gesture—it shows that you care about their physical and mental health, and that you understand how important it is for them to recharge. Supporting their wellness ultimately benefits your entire household, ensuring they stay energized and engaged in their work.

Housing and Relocation Assistance: Making the Transition Smooth

If your nanny is relocating for the role, housing or relocation assistance is a huge perk that can make your offer stand out. Whether it’s providing a private apartment, offering on-site accommodations, or helping cover moving expenses, this level of support can make a big difference, especially in high-cost living areas. The security of having a comfortable, stable place to live means your nanny can focus on their job rather than worrying about housing logistics.

For families unable to offer housing, a relocation stipend or help in finding affordable accommodations still goes a long way in showing your commitment. It’s about making the transition as easy and stress-free as possible—something every nanny will appreciate.

Travel Perks: Turning Work Trips into Enjoyable Experiences

Traveling with your family can add excitement to the job, but it’s important to remember that for your nanny, it’s still work. However, there are ways to make travel more enjoyable while still maintaining professional boundaries. One great perk is giving your nanny some personal time during the trip, allowing them to explore new destinations on their own. Even better, offering flexibility to bring along a partner or friend, extend their stay for personal travel, or granting them a few extra days off during the trip can make these work trips feel more rewarding.

Beyond just the logistics, consider adding fun travel perks, like access to your family’s vacation homes during their off time or sharing frequent flyer miles for their personal trips. Some families even add their nanny as an authorized user on travel credit cards, which can come with perks like airport lounge access or priority boarding. These added bonuses make the travel aspect of the role feel more enjoyable and show that you’re invested in making their job a positive experience.

Household and Lifestyle Perks: Elevating Your Nanny’s Experience

When it comes to making your nanny feel truly valued, lifestyle perks can take their experience from good to great. But here’s the catch—these perks should be offered as genuine gestures of appreciation, not as a substitute for fair compensation or a way to justify overworking them. They’re about enhancing your nanny’s quality of life, showing that you care about their well-being and happiness in their role, without strings attached.

One great way to offer support is by providing access to a personal vehicle for off-duty use. This simple perk can save your nanny the hassle and expense of maintaining their own car, giving them flexibility and freedom during their personal time. Another thoughtful touch is granting access to your home gym if you have one, making it easier for your nanny to stay active without the need for a pricey gym membership. It’s these small conveniences that go a long way in improving their day-to-day life.

If your household benefits from a private chef or regularly stocked kitchen, offering prepared meals or snacks for your nanny can make their workday smoother. Not only does it eliminate the need for them to meal prep or buy lunch, but it also reinforces that you care about their comfort and well-being.

Think outside the box—personal development perks like subscriptions to wellness apps, access to therapy, or even massage stipends show you care about their mental health as well. These thoughtful perks help create a more balanced and enjoyable working relationship, but they should never take the place of fair pay or appropriate working conditions.

By including these kinds of perks in the compensation package, you’re fostering a supportive and positive environment that makes your nanny feel appreciated. When they feel valued, they’re more likely to stay engaged and happy in their role with your family, creating a win-win situation for everyone.

Building a Positive, Long-Term Working Relationship

When you go beyond the basics and create a thoughtful compensation package, you’re not just offering a job—you’re building a lasting relationship based on mutual respect and care. Nannies who feel truly valued, supported, and appreciated are far more likely to stay engaged, loyal, and committed to your family in the long run.

We help our clients craft compensation packages that reflect their commitment to creating a real partnership with the candidates they are hoping to hire. It’s not just about pay; it’s about putting together a package that supports their financial, personal, and professional growth—ensuring that they feel fulfilled in their role and can provide the best care for your family, when you show your nanny that their well-being matters, you set the foundation for a positive, long-term connection that benefits everyone.

Final Thoughts

Building a compensation package that stands out is about way more than just tossing out the highest hourly rate. Sure, pay matters, but if you really want to attract (and keep!) top-notch nannies, you’ve got to think beyond the paycheck. When you include perks like health insurance, educational assistance, and retirement contributions, you’re telling your future nanny, “Hey, we’re in this for the long haul, and we’ve got your back.” That thoughtful mix of benefits shows them they’re valued, respected, and supported in a way that money alone can’t do.

When you’re putting together your offer, zoom out and look at the bigger picture. This isn’t just about ticking off your family’s needs; it’s about making sure your nanny knows you’re invested in their growth — both personally and professionally. A nanny who feels truly appreciated is going to show up every day with that same level of care and commitment, and who doesn’t want that?

By taking the time to craft a well-rounded compensation package, you’re setting the stage for a strong, long-term working relationship that benefits everyone involved.

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