Stipend vs. Salary: 2025 Guide on Similarities and Differences

Browse through any selection of job ads, and you’ll notice the many ways that recruiters promote their compensation packages. Often, they’ll include a salary range and available health benefits and 401(k) plans. Increasingly, you’ll also come across “stipends,” a perk that employers hope will attract the best talent in the market. 

Our stipend vs. salary guide explains more about how these fit into your total rewards package, including what stipends are, how employees receive them, and how they might impact your taxable income. 

What is a stipend?

Companies offer stipends as a fixed sum that makes up a portion of their employees’ total compensation packages. The stipend is intended to cover specific employee expenses incurred during work or outside of working hours in their personal lives. Employees typically receive their stipend at regular intervals, such as monthly or annually. 

Traditionally, stipends paid costs for interns, volunteers, or employees in training programs. For example, clergy members or academic researchers might have received a monthly stipend to cover living costs. 

But nowadays, stipends are a staple fringe benefit in the corporate world; employers offer them to enhance their compensation package, hoping to attract and retain top talent. Modern stipends cover a wide range of eligible expenses, including housing, transportation, or professional development courses. 

Example: An employer might pay each remote employee $30 per month toward their home internet expenses or offer $50 per month to all employees to spend on wellness. 

Our guide to employee stipends provides an overview of this popular employee benefit and offers inspiration as you design your stipend program. Download our employee stipends guide to learn about the types of stipends available and how to design a successful program.

What is a salary?

A salary is a fixed and regular form of compensation that an employer pays to an employee in exchange for their work. Typically expressed as an annual amount, a salary is divided into consistent pay periods, such as biweekly or monthly, and is outlined in a formal employment agreement or contract.

Unlike stipend payments, which may be offered for specific expenses or purposes, a salary is comprehensive and isn’t tied to any single activity or cost. It reflects the employee’s overall role and responsibilities and is often influenced by their experience, skill level, location, and performance.

Because salaries are contractual, they offer predictability and stability. Employees know exactly how much they’ll earn, regardless of hours worked in any given week, making salaried roles distinct from hourly-wage positions or variable stipends.

Salaries vs stipends: How do they differ?

It’s easy to get confused about the differences between a stipend and a regular salary, as they both form part of an employee's compensation package. However, there are key differences between these two types of compensation, particularly in terms of taxation, purpose, and amounts. 

Taxation 

The salary or stipend amount an employer offers isn’t necessarily what the employee receives, depending on how employers and employees pay taxes on them. 

Stipend 

Stipends fall into three different categories for taxation purposes: 

• Pre-tax stipends: In a few cases, stipends can be deducted from the employee’s compensation package before tax rules are applied. In this way, the tax regulations increase the stipend’s value for the employee. 
• Working condition fringe benefits: Employers can offer certain non-taxable benefits if they use an accountable plan to highlight a clear business reason for the stipend.  
• Taxable benefits: The majority of stipends will fall into this category. The IRS requires that such payments are listed on salaried employees’ W-2 forms, and employers must withhold relevant state and federal payroll taxes accordingly. 

Tip: The Employer’s Tax Guide to Fringe Benefits 2025 is available from the IRS to help you understand how specific stipends are classified. 

Salary 

Salaries are treated as regular earned income and are subject to all applicable taxes. For example, employers must withhold federal and state income tax, as well as Social Security and Medicare contributions.

Salaries are always reported in full on the employee’s W-2, along with any applicable bonuses or compensation.

Purpose 

So, what are stipends and salaries actually used for? 

Stipend 

Stipends are typically designated for a defined use, such as transportation, wellness, continuing education, or home office expenses. The employer sets the rules for how the stipend can be used, often aligning it with business goals or employee well-being.

In case the purpose becomes a little muddy, employees may need to submit receipts or documentation to confirm they’re using the stipend appropriately, especially for non-taxable benefits.

Salary 

In contrast, employees can use their salary however they choose. Often, they’ll use it to pay for essential living expenses, like rent, groceries, utilities, and childcare, but it’s entirely at their discretion.

There are no reporting requirements or proof of spending required; salary is compensation for work performed, not tied to any particular category.

Fixed sum 

What does the employee actually receive in their monthly paycheck? 

Stipend

Stipends are usually offered as a fixed amount to all eligible employees, teams, or roles, regardless of individual performance or tenure. For example, all remote employees might receive a $50 monthly internet stipend, or all field reps might get a $200 transportation stipend.

Because stipends are standardized, there’s typically no variation from one employee to another within the same program.

Salary 

Employers often adjust salaries over time, which are influenced by factors like job level, years of experience, performance, and geographic location. Depending on the company’s pay philosophy, employees may take advantage of wiggle room and negotiate a higher salary based on their qualifications. 

Example: Sales professional Eduardo might earn a higher salary than his colleague Craig due to his longer tenure and stronger sales results. However, both employees receive the same wellness and internet stipends as part of their overall benefits package.

Legal minimum amounts

Employers must be aware of the red tape when providing salaries and stipends to their employees. 

Stipend 

First up, there are no federally or state-mandated minimum amounts for stipends, as employers aren’t required to offer them. Instead, employers may choose to set consistent stipend values based on role, location, or need.

Example: A Goldman Sachs employee working late might receive a $30 meal allowance, while a restaurant critic at JP Morgan could receive an annual stipend of $30,000 for dining out.

Salary 

The opposite is true with salaries, which must meet or exceed federal and state minimum wage requirements based on a 40-hour workweek equivalent. There’s no getting around it—employers must stay current on evolving wage laws, which vary by state and differ between exempt and non-exempt roles.

When to offer stipends: 7 different scenarios

Are stipends the right choice for your business? Here are some common scenarios where they could be a good fit. 

Scenario 1: When you want to provide better benefits 

Modern employers must look beyond healthcare and retirement benefits to offer a more contemporary mix of the most important benefits to employees. Stipends are a flexible way to cover the diverse needs of your workforce, from support with housing and parenting to education and travel. 

As an idea of what other companies offer, the 2025 Benepass Benchmarking Guide reveals the following benefits trending with our internal customers. These include the following: 

• Lifestyle spending accounts
• Fitness and wellness 
• Work from home
• Professional enrichment
• Food
• Phone and internet
• Commuter
• Caregiving

Download the complete guide to research benefits trends and benchmark your offerings against companies of similar size and industry. 

Scenario 2: When you want to receive tax benefits 

Depending on the nature and structure of the stipend, some offer tax advantages for both employers and employees. For example, educational stipends can be tax-deductible and tax-free, up to $5,250 per year per employee. 

Scenario 3: When you need to attract and retain talent 

Salary, title, and growth potential aren’t the only ways to entice and hang onto top talent. Some workers will jump ship if another organization offers better perks, while job seekers can be attracted to a well-rounded benefits package. In fact, 34% of job seekers cite the desire for better benefits as a primary reason for their job search.

When companies pay stipends, this can give them a competitive edge in the job market, especially if you can offer in-demand benefits like tech or home office stipends in a remote work era. Some of the most popular are: 

• Free or subsidized meals at work 
• Subsidized phone or internet for remote working 
• Stipend for home office setup and supplies 

Scenario 4: When you need a more efficient and cost-effective approach 

Stipends can be cost-effective for companies, as you provide benefits upfront without the administrative cost and burden of using a reimbursement model. As stipends are typically fixed, they’re straightforward to manage and budget for compared to salary increases. 

Additionally, benefits platforms can save companies money through employee forfeiture. While some companies choose to tack stipends onto paychecks, others opt for benefits administration software like Benepass that allows employers to set expiration rules and keep unspent funds. 

For example, a company might choose to provide a monthly stipend that expires at the end of the month, leading to significant cost savings if even a small percentage of funds go unspent.

Scenario 5: When you want to enhance your company culture 

Employee wellness is the heartbeat of a thriving company culture, so it’s no surprise that 85% of companies offer some form of wellness program to their employees. Stipends for well-being, whether aimed at physical health, mental health, or social good, create a sense of alignment between employer values and everyday employee experience. 

For example, wellness program stipends encourage healthier daily habits, while community service stipends help employees feel more connected to a shared mission.

Scenario 6: When you want to boost employee morale and engagement

Companies in the top quartile for engagement are 23% more profitable than those in the bottom quartile for engagement, according to Gallup. Stipends are an impactful way to boost engagement (and your bottom line) by offering financial assistance for multiple aspects of your employees’ personal or professional lives. 

When employees feel seen, supported, and valued, morale naturally improves—and that sentiment compounds when organizations combine stipends with thoughtful employee recognition programs. Whether it's a spot bonus for going above and beyond or a stipend for professional growth, these initiatives reinforce appreciation and strengthen loyalty.

Scenario 7: When you want to encourage professional development 

Continuous learning in the workplace keeps employees’ skills up to date and marketable while strengthening a company’s talent pool. According to LinkedIn’s Workplace Learning Report, 88% of employers are concerned about retention, and employee development is a top benefit they can offer to hold onto their people. 

Professional development stipends demonstrate an employer’s commitment to the growth and advancement of their employees, leading to a more skilled and competent workforce. 

10 common types of stipends

Stipends are highly flexible, meaning you can design the perfect stipend type and tailor its frequency, eligibility, and amount to best suit your business. If you’re looking for some inspiration, here are 10 common types of stipends used by businesses today: 

Apprenticeship or internship stipend

Companies that offer internships or apprenticeships may not offer a traditional salary but instead financial support via a stipend. For example, a Congress intern earns between $1,612.53 (if working for the House of Representatives) and $1,986 (if working for the senatorial office).

Family stipend

Family stipends are becoming an essential part of inclusive benefits strategies, helping employees manage the financial realities of caregiving, fertility, and family planning. These stipends support a wide range of life events, from adoption and surrogacy to elder care and pet fostering.

Companies like Adobe offer adoption and surrogacy stipends up to $50,000. Spotify and Google help with egg freezing and fertility treatments between $10,000 and $75,000. Even Rover, a dog walking platform, offers a $1,000 stipend to employees looking to foster or adopt a new pet. 

At Benepass, 5% of customers offer family planning stipends, with a median annual contribution of $20,000. Another 5% offer caregiving stipends, commonly set at $1,000 per year, to support employees balancing work and family responsibilities.

Commuter stipend 

A commuter stipend is an allowance provided to employees to cover the costs of commuting to and from work. It can include monthly transit passes, parking fees, ride-sharing expenses, toll reimbursement, or bicycle-related expenses. For those who drive to work, employers may offer a gas stipend to support employees with the rising cost of gas. 

At Benepass, 78% of customers offer transit benefits, while 74% provide parking stipends, with a median annual contribution of $1,800. Overall, these stipends provide a straightforward way to reduce friction for employees navigating in-office work and hybrid schedules, especially in high-cost urban areas.

Work from home stipend 

Remote work is a staple of the post-pandemic working world. To provide financial support for employees in this new environment, employers may offer work from home stipends. 

Our 2025 Benepass Benefits Benchmarking Guide finds that 24% of our customers offer this stipend, worth a median annual value of $1,200. A typical WFH stipend will cover expenses related to a home office setup, such as desk chairs, monitors, printers, and other necessary equipment. It may also include reimbursement for home internet expenses. 

Medical travel stipend 

A medical travel stipend supports employees who need to travel to access specialized, out-of-state, or out-of-network healthcare. This benefit can help offset costs such as transportation, lodging, or meals related to receiving critical medical treatment not available locally.

Only 5% of Benepass customers offer medical travel stipends, recognizing the importance of equitable healthcare access for employees and their families. This type of benefit can be especially impactful in supporting reproductive care, gender-affirming treatment, or rare condition therapies, so no one is forced to choose between their health and financial stability.

Fitness and wellness stipend 

Wellness stipends are one of the most popular ways to support your employees’ mental and physical health. They can cover gym memberships, fitness classes, wellness retreats, meditation apps, counseling, or any other activity that promotes a healthy lifestyle. 

Employers usually offer these stipends to their employees to encourage overall well-being rather than as an alternative to traditional health insurance. 31% of Benepass customers offer a wellness stipend, with the median value of the perk worth $750. 

Food stipend 

Meal allowances complement wellness stipends by ensuring employees can access nutritious food when cost-of-living increases put healthy meals out of reach for many. Food stipends can fund meal delivery services, catered lunches at work, or a grocery allowance. They’re highly inclusive, ensuring that remote employees can take advantage of free food as easily as their in-office counterparts. 

12% of Benepass customers offer a food stipend worth a median of $4,800. Read our customer story with Wix to see how the website development platform launched a biweekly food program with 100% engagement. 

Professional development stipend  

Professional development stipends ensure that every employee in every rank or role, has the opportunity to grow and develop their skills. They cover costs related to attending conferences, seminars, workshops, or other professional development opportunities. 

These student aid costs differ from tuition reimbursement benefits, which typically refund employees for the cost of their education. 21% of Benepass customers offer professional enrichment stipends worth a median annual contribution of $1,200. 

Cell phone stipend 

Employees who use their personal devices for work may be eligible for a cell phone stipend to cover the costs of their phone usage. 9% of Benepass customers offer this perk, paying an annual median of $660 for a phone-only plan or up to $1,200 per year as part of a cell and internet services bundle.

Lifestyle spending account stipend 

A lifestyle spending account (LSA) is a great stipend option for employers who want to provide more choice and flexibility to their employees. For this reason, 38% of all employers are planning to offer LSAs or are considering adding them in 2025. Companies can design the LSA to encompass any spending categories they like, for example, fitness, mental health, home office equipment, food, family support, or professional development. 

Employees then have the freedom to spend their benefits on items and services that fit their personal preferences and lifestyle needs. Our benchmarking guide found that 64% of Benepass customers offer LSAs and pay a median of $1,200 per year. 

To learn more about the ins and outs of launching a flexible LSA program, download our ebook Launching a Competitive Lifestyle Spending Account Program: 7 Steps for Success, which digs into budget considerations, vendor checklists, LSA design tips, and more. 

How to offer stipends using Benepass

Offering stipends alongside a healthy salary can provide a total compensation package that's impossible for current and prospective employees to resist. There’s undoubtedly some red tape associated with stipends, as employers must understand the tax implications of offering specific benefits. For example, they may need to withhold income tax on some types of stipends and be able to communicate this appropriately to their employees. 

Whether you offer pre-tax, non-taxed, or taxable stipends, Benepass makes it easy to deliver enticing benefits for any purpose. Learn more about deploying stipends from our efficient and intuitive platform by booking a free Benepass demo today. Please feel free to contact sales@getbenepass.com with any questions.