Daycare vs Nanny Cost Calculator
Example: Daycare cost per child: 1300 $/mo · Nanny hourly rate: 22 $/hr · Nanny hours per week: 45 hrs · Number of children in care: 1
| Monthly difference (nanny − daycare) | $2,990 |
| Daycare total (monthly) | $1,300 |
| Nanny (monthly) | $4,290 |
| Annual difference | $35,880 |
Worked example
At $1,300/month for daycare for one child, versus a nanny at $22/hour for 45 hours a week (about $4,290/month), the nanny costs roughly $2,990 more per month — about $35,880 a year. But add a second child and daycare doubles to $2,600/month while the nanny cost stays $4,290, cutting the gap to about $1,690/month. By three children, the nanny is usually cheaper.
Frequently asked questions
When does a nanny become cheaper than daycare?
A nanny's cost is largely fixed no matter how many children you have, while daycare charges per child. So the more kids you have in care at once, the lower a nanny's per-child cost. For many families the tipping point is the second or third child — run your own numbers above by changing the child count.
Do I owe taxes for hiring a nanny?
Usually yes. If you pay a household employee like a nanny more than the IRS annual threshold, you generally owe nanny taxes (Social Security, Medicare, and often unemployment) and must issue a W-2. A daycare center handles its own payroll taxes, so add the extra payroll cost and admin time to the nanny side when you compare.
Which is better for my child, daycare or a nanny?
Cost is only one factor. Daycare offers socialization, structure, and backup coverage when a provider is out; a nanny offers one-on-one care, flexibility, and care in your own home. Weigh those alongside the numbers here.
Can a tax credit or FSA lower either cost?
Both daycare and qualifying nanny costs can count toward the federal Child and Dependent Care Tax Credit and a Dependent Care FSA, which can offset a meaningful share of either option. Keep receipts and your provider's tax ID.