Work From Home Stipend: Amounts, Tax and What to Cover

A work from home stipend is money an employer gives remote or hybrid staff toward the cost of working from home: a desk and chair, a monitor, internet, sometimes a coworking desk. In SHRM's 2025 benefits survey, 55% of the US employers that responded provided home office equipment or subsidized it, with an average annual maximum of $888 among those that did. In the US, how you pay it decides the tax: a flat stipend is usually taxed as wages, while receipts-based reimbursement under an accountable plan is not.

This guide is for founders and people leads setting one up.

Stipend vs reimbursement vs provided equipment

There are three ways to fund a home office, and most companies mix them.

Some published "stipends" are really reimbursement budgets. GitLab gives new hires a $1,500 home office stipend for their first year, but staff buy the items and claim them back through the expense system (GitLab, last modified October 28, 2026). If you want the tax treatment of a reimbursement, run it like one.

How much is a typical work from home stipend?

SHRM's annual benefits survey is a widely cited benchmark. In 2025, 55% of employers provided at-home office equipment or subsidized it, and those employers offered an average annual maximum reimbursement of $888, about $17 more than in 2024. Of those employers, 95% covered office technology such as monitors and keyboards, 62% office supplies, 35% cellphone service and 22% office chairs. The survey ran from January 21 to March 10, 2025, with responses from 3,969 US organizations, and the data is unweighted (SHRM, 2025).

These two remote-first handbooks set larger first-year budgets, though GitLab's $500 yearly refresh is below SHRM's $888:

For a small team, a sensible start is a provided laptop plus a one-off setup budget, then a separate decision on internet or coworking. If you are weighing desks against stipends, the office space calculator estimates what an office costs at different numbers of office days.

How is a work from home stipend taxed in the US?

The IRS sorts these payments into accountable and nonaccountable plans, and the label decides whether the money is wages. This is general information, not tax advice: check with your accountant before you choose a method.

A flat stipend is usually wages. Payments count as made under a nonaccountable plan when employees don't have to substantiate expenses, or when you pay an amount whether or not you reasonably expect business expenses. They are supplemental wages, subject to income tax withholding, social security, Medicare and FUTA (IRS Publication 15, 2026). So a $100 monthly stipend reaches the employee as less than $100, and you owe employer payroll taxes on it. Some employers gross it up so the employee nets the full amount; ask your accountant how to calculate that.

Reimbursements under an accountable plan are not wages. An accountable plan has three rules (IRS Publication 15, 2026):

1. The expenses are allowable and incurred while working for you.
2. Employees substantiate them within a reasonable period.
3. Employees return any excess within a reasonable period.

The IRS generally treats substantiation within 60 days and return of excess within 120 days as reasonable (IRS Publication 463, 2025).

Equipment you provide is usually not taxable. Publication 15-B excludes working condition benefits. These cover property you provide so an employee can do their job, to the extent the cost would be deductible to them as a business expense (IRS Publication 15-B, 2026).

Two more points for your accountant. Employees mostly can't deduct unreimbursed costs themselves: for 2025 returns, with miscellaneous itemized deductions suspended, only a few listed groups, such as Armed Forces reservists, may use Form 2106 (IRS Publication 463, 2025). And state law can require reimbursement whatever your tax choice. California, for example, requires employers to reimburse necessary work expenses under Labor Code section 2802, and that applies to remote staff, as the Court of Appeal confirmed in Thai v. IBM in 2023 (Davis Wright Tremaine, July 17, 2023). The remote work policy template covers the state rules in more detail.

Outside the US: the UK example

Outside the US, give each country its own annex. In the UK, an employer can pay up to £6 a week (£26 a month for monthly paid staff) toward extra household costs tax-free. The employee must regularly work from home under an agreed arrangement, and paying more needs evidence of the actual costs. Equipment is tax-free when private use is insignificant (GOV.UK, updated September 30, 2026). For the tax year from April 6, 2026 to April 5, 2027, UK employees can't claim working-from-home tax relief themselves (GOV.UK, retrieved November 4, 2026). Elsewhere, check with a local accountant or your employer of record.

What should a remote work stipend cover?

Cover what the job needs, not what people would buy anyway:

• Equipment: desk, chair, monitor, keyboard, mouse, headset, webcam. Provide the laptop rather than funding it.
• Ergonomics: put a proper chair and screen height ahead of gadgets.
• Internet: consider a share of the monthly bill rather than all of it, if people already had a connection.
• Coworking: a monthly cap for people who work better outside the house. GitLab excludes clubs, gyms and cafes, and 37signals excludes clubs and social spaces.
• Supplies: a small monthly limit, or nothing.

Hybrid staff with an office desk on anchor days can reasonably get a lighter setup budget and no coworking budget. Your hybrid work schedule and the choice of hybrid vs remote work decide how much of the week people actually work from home.

A stipend policy you can copy

Replace the bracketed parts, and have your accountant confirm the payment method first.

HOME OFFICE AND REMOTE WORK EXPENSES

Who this covers: employees with an approved remote or hybrid arrangement.

1. Equipment we provide
[Company] provides a laptop and [headset]. Company equipment stays company
property and is returned within [10] business days of leaving.

2. Setup budget
New employees can claim up to [amount] in their first 12 months for a desk,
chair, monitor, keyboard, mouse, webcam or lighting, plus [amount] every
[24] months for replacements. Submit receipts in [expense tool] within
60 days of purchase. Unused budget is not paid out.

3. Ongoing costs [choose one]
- Internet: we reimburse up to [amount] a month of your internet bill,
  claimed monthly with the bill attached.
- Allowance: we pay [amount] a month through payroll. This is taxable
  income and appears on your pay stub.

4. Coworking
Up to [amount] a month at a dedicated coworking space, approved by your
manager in advance.

5. Hybrid employees
Setup budget of [amount], no coworking budget.

6. Not covered
Rent, renovations, personal phones and items mainly for personal use.

Questions: [name or role]. We review this policy every 12 months.

Common mistakes

• Calling a flat payment a reimbursement. No receipts and no returned excess means a stipend for tax purposes, whatever the policy says.
• Assuming a stipend satisfies state law. A flat amount below necessary costs may not meet a state reimbursement rule.
• No ownership rule. Decide up front whether equipment comes back when someone leaves.
• Never reviewing it. Revisit amounts yearly, and remember office days cost employees too: the presence tax puts a number on the commute.

What a stipend doesn't solve

A stipend doesn't tell a remote team what got done this week. DoneThat, which publishes this blog, has nothing to do with stipends: it doesn't track receipts or run reimbursements. It reconstructs each person's workday from screen and app activity (screenshots are never stored) and writes a daily summary. Each person decides whether to share it, so the team sees written work instead of presence or hours. Screen-based capture is a bigger ask than a timer. DoneThat is built for teams that want visibility without monitoring software.

Frequently asked questions

Is a work from home stipend taxable?

In the US, a flat stipend paid without receipts is generally taxable wages. Reimbursements under an accountable plan, where employees substantiate costs and return any excess, generally are not. Check with your accountant for your setup.

How much should a work from home stipend be?

SHRM's 2025 survey puts the average annual maximum at $888 among employers that fund home office equipment. That is a yearly cap. GitLab and 37signals publish one-off first-year setup budgets of $1,500 and $3,000, and GitLab adds a $500 yearly refresh.

Do hybrid employees get a work from home stipend?

That is your call. If they have an office desk on anchor days, a lighter setup budget and no coworking budget is a reasonable default.

Sources

• 37signals. Benefits and Perks. 37signals Employee Handbook. Retrieved November 4, 2026.
• Davis Wright Tremaine, Hull, B., Im, C. and Droz Keyes, J. (July 17, 2023). Reimbursing California Remote Employees' Expenses: Obligation Confirmed. Law firm summary of Thai v. IBM, California Court of Appeal, July 11, 2023.
• GitLab (last modified October 28, 2026). Global Travel and Expense Policy. GitLab Handbook. Retrieved November 4, 2026.
• GOV.UK, HM Revenue and Customs (updated September 30, 2026). Expenses and benefits: homeworking. Guidance for employers.
• GOV.UK, HM Revenue and Customs. Claim tax relief for your job expenses: working at home. Retrieved November 4, 2026.
• Internal Revenue Service (2026). Publication 15 (Circular E), Employer's Tax Guide. Accountable and nonaccountable plans.
• Internal Revenue Service (2026). Publication 15-B, Employer's Tax Guide to Fringe Benefits. Working condition benefits.
• Internal Revenue Service (2025). Publication 463, Travel, Gift, and Car Expenses. Chapter 6, accountable plans; for 2025 returns.
• SHRM (2025). 2025 Employee Benefits Survey: Executive Summary. Online survey of 3,969 US organizations (SHRM members), January 21 to March 10, 2025; data unweighted.

Written by Don, DoneThat's AI coach (LinkedIn) - so this article is AI-written. Every figure is cited next to the claim and linked in the Sources list. This article is general information, not tax or legal advice. Published by DoneThat (Letss B.V., Amsterdam). More about DoneThat; corrections and questions go to support.