Is a Nanny Cheaper Than Daycare?

The national average posted rate is $21.75 an hour, which is Care.com's $870 a week for one child divided across a 40-hour week. That is the number the calculator starts from, and it is a national blend — a nanny in a coastal metro costs half again as much, and the same nanny costs less two counties inland.

Two things about that rate are easy to get wrong. It is not what the nanny costs you: employer taxes sit on top of it, and at full-time hours they add close to a tenth again. And it barely moves when you add a child. Going from one child to two adds $0.40 an hour in posted rates — about $69 a month — while a second daycare tuition adds well over a thousand. That gap is the entire mechanism this page measures.

Hours matter more than the rate does. Raising the nanny's rate from $21.75 to $30 an hour moves the crossover by one child. Cutting from 40 hours a week to 20 moves it by two, because a nanny is billed by the hour and a full-time daycare slot is billed whether you use all of it or not.

Hiring a nanny makes you an employer, and the taxes are the part most families find out about late. On the default inputs — two children, 40 hours, $21.75 an hour — gross wages are $3,839 a month and the all-in cost is $4,214. The difference is $375 a month you do not see in the hourly rate.

The rules have thresholds, and they are the reason a part-time arrangement can be cheaper than it looks. Social Security and Medicare attach once cash wages reach $3,000 for the year. Federal unemployment tax attaches once wages reach $1,000 in a single calendar quarter, and it applies to the first $7,000 only, which caps it near $42 a year. State unemployment insurance has its own threshold and its own wage base, and both vary by state.

None of this applies to daycare. A center is a business that employs its own staff, and its tuition already contains their payroll taxes. That asymmetry is why an apples-to-apples comparison has to add the employer side to the nanny and not to the center.

A share moves the answer by a full child. On the national defaults a solo nanny becomes cheaper than daycare at the fourth child; split with one other family, it happens at the third.

It is not half price. The nanny's rate rises when she takes a second family's children, so two families split a larger number than one family would have paid. On these inputs a shared nanny costs each family about two-thirds of what a solo nanny costs — $2,786 a month against $4,140 for one child at 40 hours — which matches what Care.com, Nest Payroll, and Poppins Payroll all report independently. Any calculator that tells you a share halves the cost is dividing where it should be scaling.

The share also changes the threshold. Solo, a nanny beats daycare for two children once tuition passes $2,220 a month per child — roughly a high-cost metro. Shared, that falls to $1,495, which a great many markets already clear.

Infant care is the most expensive year at a center, but by less than most parents expect: $332 a week against $308 for a toddler, an 8% premium nationally. The gap is wider in some states and narrower in others, and it is nothing like the difference between one child and two.

The infant year is still where a nanny looks best, for a reason that has nothing to do with infants. A center's tuition falls as a child ages out of the infant room and falls again at preschool. A nanny's rate does not. Families who compare the two during the newborn months are comparing a nanny at her cheapest relative to daycare, and the comparison quietly gets worse every year after.

Infant rooms also run the longest waitlists, which is a real constraint and not a financial one. This calculator prices care that is available to you. It cannot price care you cannot get.

• Your income, or any tax on it. This page compares two care structures. It does not ask what you earn and does not tell you whether working is worth it. The Second Income Calculator answers that one.
• The Dependent Care FSA and the Child and Dependent Care Credit. Both can offset part of either structure, both depend on your income and filing status, and including them would mean asking for a salary. They are real money and they are not in these figures.
• Part-time daycare rates. The tuition you enter is treated as fixed no matter how few hours you need, because a full-time slot usually is. If your center prices part-time, the calculator overstates daycare on a part-time comparison — the one direction where it favors the nanny.
• Sibling discounts past the second child. The 10%-off-the-second-child figure is applied as a flat percentage of the total. Centers that discount every additional child would come out cheaper than this shows.
• Nanny taxes as a task. The calculator counts what you owe. It does not file it, and running household payroll yourself is a real recurring chore that a payroll service exists to absorb.
• Au pairs and family care. An au pair is a different cost model entirely — stipend, agency fee, room and board. Grandparents and other family help are not priced here at all, and in the years they are available they change the arithmetic more than any input on this page does.
• What the day is actually like. A nanny is care that comes to your house. There is no morning drop-off and no evening pickup. There is no handoff from school to an aftercare program, and no second building to get a child to by three o'clock. You know where your children are and who they are with, all day, and it is one adult you chose rather than a staff roster that turns over. The shape of the day is yours to set — when they eat, when they nap, what they do in the afternoon, whether a sick morning means anyone goes anywhere. None of that is in the number above.
• A nanny who is sick. A center is closed on holidays and never on Tuesday. One nanny with the flu is a day you do not work, or a day you pay twice. The same house that removes the drop-off removes the backup.

This page can tell you exactly what the difference costs. It cannot tell you what that difference is worth, and the families who pay it are not making an arithmetic error. Control over your child's day is a real thing to buy, it is priced in dollars like everything else, and knowing the number is how you decide whether you want it at that price.