Offering robust employee benefits can greatly help companies that are looking to attract and retain top talent. In addition to offering traditional benefits like health insurance or retirement contributions, more employers are offering stipends to employees. These are additional funds an employer provides to cover specific employee expenses on a one-time basis or on a regular cadence. Stipends provide employees with extra financial support and demonstrate an organization's commitment to employee well-being and satisfaction.
In this article, we'll review several types of employee stipends, provide examples for each, and explain how you can offer them to your team.
You can offer a health stipend to cover your employees’ out-of-pocket medical expenses and health insurance premiums. In some cases, a small business that can't afford traditional group health insurance may find that a health stipend is the best option to help employees pay for their own individual coverage.
However, you can’t require employees to submit receipts or invoices to prove they spent their stipend on any items included in IRS Publication 502. You also can’t ask employees for proof of health insurance coverage.
A health stipend can cover expenses related to:
Here are some companies that offer health stipends:
If you want a tax-free alternative to a health stipend that allows you to reimburse your employees for their medical costs, consider a health reimbursement arrangement (HRA). This IRS-approved benefit allows you to set a monthly allowance for your employees to use on items listed in IRS Publication 502, including individual health insurance policies. Your employees submit proof of their qualifying purchases, and you reimburse them up to their available allowance.
See how stipends and HRAs compare with our chart.
Employee well-being has become a top priority for companies looking to create a positive work environment. You can allocate a wellness stipend to support employees' physical and mental health. For instance, a health-conscious company might provide a wellness stipend for employees to join a local gym or participate in meditation or yoga classes.
A wellness stipend is an excellent addition to your benefits package to help employees with wellness expenses not covered by a health stipend or HRA.
A wellness stipend can cover expenses related to:
Here are some companies that offer wellness stipends:
With the rise of remote work, many companies recognize the need to support employees in creating a productive home office environment. You can provide a remote work stipend to cover expenses related to work-from-home setups. For example, a company made up of virtual teams might provide a stipend for employees to create a comfortable and efficient workspace at home.
A remote work stipend can cover expenses related to:
Here are some companies that offer remote work stipends:
Commuting to work can be stressful and expensive for many employees. To alleviate this burden, some companies offer commuter stipends to help cover transportation costs. This gesture shows that you value their time and effort in getting to work. It can also contribute to increased employee satisfaction. For example, a company located in a major city might provide a monthly transportation stipend to help employees with their daily commuting expenses.
While you can offer tax-free transportation benefits of up to $300/month for transit and $300/month for parking, many expenses, such as bike expenses and gas, are ineligible from the IRS qualified transportation benefits program. A taxable stipend allows you to extend your commuter benefits beyond the IRS limits.
A commuter stipend can cover expenses related to:
Here are some companies that offer commuter benefits:
A travel stipend is a popular perk companies offer to encourage employees to explore new places or attend conferences and events. It can cover expenses such as airfare, accommodations, and transportation. For instance, a software development company might offer a travel stipend for employees attending industry conferences to stay updated on the latest trends and technologies.
A travel stipend can cover expenses related to:
Here are some companies that offer travel stipends:
In today's digital age, having access to the right technology is crucial for productivity and efficiency. You can provide a technology stipend to help employees acquire or upgrade their work-related devices and software. For example, a marketing agency with a remote workforce might offer a technology stipend to its designers to ensure they have the latest design software and hardware to create high-quality graphics.
A technology stipend can cover expenses related to:
Here are some companies that offer technology stipends:
Encouraging continuous learning is crucial for employee growth. An education stipend enhances employees’ knowledge and demonstrates your commitment to their career development. For example, a marketing agency might provide an education stipend for employees to take digital marketing courses to enhance their skills and stay ahead in the industry.
An education stipend can cover expenses related to:
Here are some companies that offer education stipends:
In addition to education stipends, offering a professional development stipend allows employees to invest in activities that enhance their overall professional growth. For instance, a software development company might offer a professional development stipend to its engineers, allowing them to attend coding boot camps or purchase books and resources to stay up to date with the latest technologies.
A professional development stipend can cover expenses related to:
Here are some companies that offer professional development stipends:
Balancing work and family responsibilities can be challenging for employees with young children. Providing a stipend to assist with childcare expenses can greatly alleviate this stress. This benefit can increase employee loyalty and productivity by allowing parents to focus on their work without worrying about their children's well-being. For example, a company might provide a childcare stipend to support working parents and promote a family-friendly work environment.
A childcare stipend can cover expenses related to:
Here are some companies that offer childcare benefits:
Offering a family stipend can be a valuable benefit for employees, as it helps to alleviate some of the budget burdens associated with family life. Similar to a childcare stipend, a family stipend can help employees financially and reduce stress, allowing them to stay focused at work. But, your employees can use a family stipend for expenses other than childcare. For example, an employer may offer a family stipend to support employees who double as caretakers in their families.
A family stipend can cover expenses related to:
Here are some companies that offer childcare benefits:
Many companies provide a meal stipend to cover the cost of food for employees. This can be particularly useful for employees who work long hours or have to travel regularly for business purposes. For instance, a tech startup might offer a food stipend to provide employees with healthy and delicious meals to keep them energized throughout the day.
A meal stipend can cover expenses related to:
Here are some companies that offer meal stipends:
Pets are an important part of many employees' lives, and offering a pet stipend can be a unique and appreciated benefit. This stipend shows that you understand and support your employees' personal lives, fostering a positive work-life balance. For example, a veterinary clinic can offer employees a pet stipend that helps them cover routine medical care and supplies.
A pet stipend can cover expenses related to:
Here are some companies that offer pet benefits:
Employers can administer stipends on their own, but the administration process is often complicated and time-consuming. It's easier to work with a benefits administrator or software provider.
Once you decide how much you want to spend, you can design your stipend benefit to reflect your employees’ needs. You can adjust allowances based on location and other employee classes–like part-time or seasonal.
When you offer employee stipends, your employees feel valued and appreciated. They can also help attract new talent. Our 2024 Employee Benefits Survey Report found that 81% of employees say the benefits package an employer offers is an important factor in whether or not they accept a job.
Stipend payments may be taxable depending on your benefits program and what expenses you reimburse employees for.
Stipends for things like health and wellness count as taxable income because they're extra compensation for employees. Employers may need to withhold federal, state, or local income taxes, and employees are taxed on the amounts reimbursed.
Stipends aren't considered wages, so employers don’t need to withhold Social Security and Medicare taxes. However, taxable stipends are considered extra income on employees' tax returns, and employees must pay any associated taxes.
Other stipends are tax-free or tax-advantaged. You can check IRS Publication 15-B33 for qualifying fringe benefits and work with a tax professional to ensure compliance.
Whether you offer a tax-free or taxable stipend, you should consult with your accountant or tax professional for further guidance.
Offering a wide range of popular stipends can help you attract and retain talented employees, enhance their overall experience at your company, and foster a positive work environment. Remember to customize these additional benefits based on your employees' needs and preferences, as well as your company's budget. By investing in your employees' well-being and growth, you can create a thriving and motivated workforce.