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Childcare Centers & Preschools: Payroll Tax Guide (2026)
Payroll tax for a childcare center is the federal stack every employer runs, withholding, 7.65 percent employer FICA, FUTA, deposits and Form 941, plus the childcare center items this page cites: IRS About Form W-10, IRS Exempt organizations. BEG: $45 per employee per month inside the payroll software you already use, live in 3 to 5 days.
Tax rules specific to childcare centers
Parents who claim the child and dependent care credit or receive benefits under an employer dependent care plan use Form W-10 to obtain the care provider's correct name, address and taxpayer identification number, so a center must be able to furnish its TIN to families.
A childcare organization exempt from income tax under section 501(c)(3) is also exempt from federal unemployment tax (FUTA), and that exemption cannot be waived. An organization that is not a 501(c)(3) must pay FUTA and report it on Form 940.
An employer that had at least 50 full-time employees, including full-time equivalent employees, on average during the prior year is an applicable large employer for the current calendar year and is subject to the ACA employer shared responsibility and information reporting provisions.
The stack every childcare center runs
On one of the childcare workers at the May 2025 national median of $34,980, the employer share of Social Security and Medicare is $2,676 a year, FUTA is $42 after the 5.4 percent state credit on the first $7,000, and income tax withholding follows the employee's W-4. Deposits are monthly or semiweekly depending on the prior lookback period, with a next-business-day deposit whenever $100,000 accumulates. Form 941 is due the last day of the month after each quarter; W-2s and any 1099-NEC at the $2,000 threshold are due January 31.
The rules behind this page, with sources
General information, not legal advice. Every rule below was read on the agency page linked next to it.
- Parents who claim the child and dependent care credit or receive benefits under an employer dependent care plan use Form W-10 to obtain the care provider's correct name, address and taxpayer identification number, so a center must be able to furnish its TIN to families. [IRS About Form W-10]
- A childcare organization exempt from income tax under section 501(c)(3) is also exempt from federal unemployment tax (FUTA), and that exemption cannot be waived. An organization that is not a 501(c)(3) must pay FUTA and report it on Form 940. [IRS Exempt organizations: What are employment taxes?]
- An employer that had at least 50 full-time employees, including full-time equivalent employees, on average during the prior year is an applicable large employer for the current calendar year and is subject to the ACA employer shared responsibility and information reporting provisions. [IRS Determining if an employer is an applicable large employer]
Read the full guide to how to calculate payroll taxes, and the rest of the childcare center payroll library.
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Frequently Asked Questions
Childcare center payroll tax: IRS About Form W-10
Parents who claim the child and dependent care credit or receive benefits under an employer dependent care plan use Form W-10 to obtain the care provider's correct name, address and taxpayer identification number, so a center must be able to furnish its TIN to families.
Childcare center payroll tax: IRS Exempt organizations: What are employment taxes?
A childcare organization exempt from income tax under section 501(c)(3) is also exempt from federal unemployment tax (FUTA), and that exemption cannot be waived. An organization that is not a 501(c)(3) must pay FUTA and report it on Form 940.
What is the employer tax cost on one of the childcare workers?
At the $34,980 national median (BLS OEWS, May 2025): $2,676 in employer Social Security and Medicare, $42 in FUTA after the state credit, plus state unemployment at the employer's assigned rate.
What does managed payroll cost for a childcare center?
$45 per employee per month, all-inclusive, inside the payroll software you already use, with no monthly minimum. Licensing-tied payroll records, subsidy payment coordination and part-time variable-hour staff are configured at setup, not billed as add-ons.
Related Resources
Anthony leads payroll solutions at Business Executive Group, a national managed payroll firm serving businesses across industries including Childcare Centers & Preschools. BEG manages payroll at $45 PEPM, all-inclusive, with deep expertise in compliance, multi-state filing, and industry-specific payroll requirements. Get instant pricing at beghr.com.
Authoritative source: IRS: Understanding Employment Taxes
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