What is a work from home stipend?

Work from home stipend

A work-from-home stipend, also known as a remote work allowance, is an amount of money employers pay beyond an employee's base salary to cover expenses related to remote work. Companies can either provide the stipend as a single lump sum or a repeat payment on a chosen schedule (e.g., monthly or yearly). For companies with remote or hybrid structures, offering work-from-home stipends is a great way to stand out and appeal to more employees.

Are work-from-home stipends required?

U.S. law does not currently require companies to offer work-from-home stipends. However, each state has different employment laws.

Some states do require expense reimbursements:

California: Requires reimbursement for necessary remote work expenses
Illinois: Mandates coverage for phone bills and internet access

Similarly, every country has its own legislation and guidelines for offering work-from-home stipends and reimbursements. Some countries offer flexibility when covering expenses, while others focus on the increase in utility usage or equipment purchases and maintenance.

Looking for specific details on how to hire around the world? Check out our hiring guides. (There are over 50!).

Is a work-from-home stipend taxable?

A common question from employees and employers alike is whether work-from-home stipends are taxable. In the U.S., work-from-home stipends are generally considered taxable income because they're monetary compensation. Employees who receive these stipends must report the amount to the Internal Revenue Service (IRS) and pay taxes on that income.

By contrast, if employees purchase equipment to work from home and receive reimbursement for those expenses from their employers, that income is typically not taxable. How a company implements work-from-home allowances will dictate whether the company and its employees must pay taxes on that money.

Companies hiring internationally must consider local laws and tax regulations before offering work-from-home stipends to remote workers abroad. Each country and region may have different tax laws governing non-salary compensation, like work-from-home stipends.

International tax treatment varies significantly by country:

Belgium: Up to €130 tax-free per month, requires employer tax filings
Canada & Netherlands: Tax relief on daily allowances for home working
Spain: No cap on amount, but requires 30% home working within 90 days

By contrast, the U.K. limits its tax relief to workers who either live far from their company's office or work for a company that doesn't have a physical office. The types of expenses that qualify are also restricted to business phone calls and utilities in the work area.

Australia also allows workers to deduct work-from-home expenses from their taxes. These workers can choose between a fixed-rate method, where they calculate the increase in their running expenses due to working from home, or an actual cost method based on all the expenses incurred while working from home.

What are the benefits of work-from-home stipends?

For employees, work-from-home stipends offset the increased costs of remote work. These costs typically include:

Equipment purchases: Desks, chairs, and computer monitors
Increased utilities: Higher electricity and water bills from being home all day
Office supplies: Basic materials needed for productivity

Though work-from-home stipends increase compensation costs, they deliver several key benefits for employers:

Talent attraction: Stand out in competitive hiring markets
Employee retention: Show you value your team's needs
Increased productivity: Better equipment leads to better performance
Cost-effectiveness: Initial investment often pays for itself through improved outcomes

What can work-from-home stipends be used for?

While companies can set their own policies, the goal of a work-from-home stipend is to help employees create a safe, comfortable, and productive home office environment. This gives your team the flexibility to purchase what they need most, without the administrative burden of submitting expense reports for every item.

Common eligible expenses often include:

Office furniture: An ergonomic chair, a proper desk, or lighting.
Technology and equipment: External monitors, keyboards, a mouse, or headphones.
Utilities: A portion of monthly internet or phone bills.
Office supplies: Notebooks, pens, and other essential stationery.

Work-from-home stipend examples

Each company sets its own work-from-home stipend structure if they choose to use one. Here are some examples:

Facebook allows full-time employees to work remotely if they choose. For employees who choose remote work, Facebook's work-from-home stipend is a one-time $1,000 payment.
T-Mobile USA provides its employees with an annual work-from-home stipend of $2,000 as part of its benefits package.
Webflow uses a monthly structure for its work-from-home stipend policy, offering $250 per month to employees who work remotely.
Like Facebook, Google's work-from-home stipend is at least $1,000 in a lump-sum payment to cover expenses employees incur setting up their home offices.
During the pandemic in 2021, the Salesforce work-from-home stipend was $500—two $250 payments for office equipment and tools.

The average work-from-home stipend ranges from $250 to $2,500 in total. Companies should consider offering stipends on the higher end of this range to attract top talent, especially in the technology industry, where work-from-home stipends are more common.

Supporting your global remote workforce

So, what does offering a work-from-home stipend really say about your company? It signals trust and shows you're invested in your team's success, wherever they work. When you remove the financial friction of setting up a home office, you're empowering people to do their best work.

As you build your global team, providing thoughtful, compliant benefits like stipends is key to creating a great employee experience. Oyster makes it simple to care for your team everywhere. Start hiring globally and offer competitive, compliant benefits with one platform.

Access hiring guides for 50+ countries, including Argentina, Australia, Armenia, and Azerbaijan

FAQ’s

What’s the difference between a work-from-home stipend and an expense reimbursement?

A stipend is typically a flat allowance you pay regardless of what someone spends, while a reimbursement is tied to documented, work-related costs. That difference matters because reimbursements usually require receipts and a clear “business purpose,” while stipends can be simpler to administer but can create more tax and payroll complexity. If you want to reduce noise for Finance and avoid back-and-forth with employees, reimbursements tend to be easier to defend in an audit, while stipends tend to be easier for employees to use.

How do you write a work-from-home stipend policy that won’t create payroll and compliance problems?

Start by being explicit about eligibility, timing, and documentation expectations, because vague policies are where disputes—and compliance issues—come from. You’ll want to define who qualifies (fully remote, hybrid, or “remote by distance”), whether it’s prorated for part-time or new hires, what happens when someone changes locations, and whether unused funds roll over. Then make the “guardrails” clear: which expenses are always allowed, which are never allowed, and when receipts are required even if you’re calling it a stipend. The practical goal is consistency—because inconsistent treatment across employees is what triggers employee-relations issues and can raise questions during audits.

Should you offer a coworking stipend instead of a home office stipend?

If your team’s biggest friction is isolation, poor workspace quality, or unreliable internet, a coworking stipend can outperform a one-time desk-and-chair budget. The catch is fairness: not everyone lives near a good coworking space, and some roles need quiet or privacy that shared spaces can’t support. A lot of companies land on a hybrid approach—an initial home setup allowance plus an optional coworking budget—so employees can choose what actually improves their ability to work, not what looks good on a benefits slide.

What should employees keep as proof if they receive a work-from-home stipend?

Even when a company doesn’t require receipts, employees should keep basic records in case tax authorities ask questions later or the company reclassifies the program from “stipend” to “reimbursement.” Receipts or invoices, proof of payment, and a short note showing how the item supports work are usually enough, and it’s smart to keep them for multiple years. This is especially important for cross-border teams, where tax treatment and acceptable evidence can vary, and what’s “fine” in one country can be a problem in another.

How do you benchmark a fair work-from-home stipend across countries without guessing?

This is where global teams get tripped up: a single global stipend amount feels “equal,” but it often isn’t equitable once you account for local costs, statutory benefits norms, and how allowances are treated in payroll. A better approach is to set a global philosophy, then localize the amount by country (and sometimes by city) using market data and local benefits expectations. If you want a fast, defensible starting point, Oyster’s Benefits Advisor can help you sanity-check what “basic,” “good,” and more competitive benefit packages typically include in a given country—so your stipend doesn’t accidentally land out of step with local norms.

About Oyster

Oyster is a global employment platform designed to enable visionary HR leaders to find, hire, pay, manage, develop, and take care of a thriving distributed workforce. Oyster lets growing companies give valued international team members the experience they deserve, without the usual headaches and expense.

Oyster enables hiring anywhere in the world—with reliable, compliant payroll, and great local benefits and perks.