The COVID-19 pandemic has caused a massive shift to remote work, with many employees now working from home either full-time or hybrid. As a result, more companies are offering work-from-home stipends to help cover costs like internet, computer equipment, furniture, and utilities. But how much is the average work-from-home stipend? Let’s take a look at the data.
What is a work-from-home stipend?
A work-from-home stipend is an amount of money an employer provides to remote employees to cover costs associated with a home office setup. This stipend helps employees pay for things like:
- High-speed internet access
- Computer and peripherals (monitor, keyboard, mouse, etc.)
- Printers, scanners, and other office equipment
- Office furniture like a desk, ergonomic chair, and filing cabinet
- Office supplies like pens, paper, notebooks, etc.
- Increased utility costs associated with working from home
Stipends are usually provided as a lump sum or periodic payment. They help offset the expenses remote employees take on by working from home instead of a company office. Stipends allow employees to create a functional, comfortable home office so they can be productive.
What’s included in the average work-from-home stipend?
Work-from-home stipends vary widely between companies. There is no one-size-fits-all approach. But most stipends aim to cover the major costs of a home office setup:
- Office furniture – Companies may provide a stipend earmarked for buying a desk, chair, filing cabinet, and other furniture.
- Computer and accessories – Stipends usually provide funds to buy a laptop, monitor, keyboard, mouse, webcam, and similar equipment.
- Internet costs – Many stipends are meant to cover high-speed broadband internet service.
- Phone service – Some stipends cover work-related cell phone and landline costs.
- Office supplies – Stipends may provide funds for supplies like pens, paper, notebooks, printer ink, etc.
- Utilities – Stipends help cover increased electricity, heating, and cooling costs from working at home.
In addition to these categories, some companies offer stipends or reimbursements for one-time home office setup costs like painting, lighting, shelving, safety equipment, and more. The goal is to provide enough funds for a fully functioning home workspace.
How do companies determine work-from-home stipends?
Companies use different methods to calculate appropriate work-from-home stipends. Common approaches include:
- Flat rate – Some stipends provide the same fixed dollar amount to all employees regardless of position, location, or needs.
- Tiered by role – Stipends may be tiered based on employee seniority and responsibilities. Higher ranking roles get higher stipends.
- Reimbursement model – Employees submit receipts for home office expenditures and get reimbursed up to a set cap.
- Needs-based – Stipends are determined case-by-case based on each employee’s expected home office costs.
- Cost of living adjusted – Stipend amounts are localized based on an employee’s geographic cost of living.
Some companies combine approaches, like using tiers and COL adjustments. The goal is to sufficiently cover costs while staying within budget.
How much do companies typically offer for work-from-home stipends?
According to various surveys and reports, the average work-from-home stipend falls between $500 to $2000 per year. Here’s a breakdown of typical stipend amounts:
Annual Stipend | Share of Companies Offering |
---|---|
$100 – $500 | 15% |
$501 – $1000 | 43% |
$1001 – $2000 | 27% |
Over $2000 | 15% |
As the data shows, stipends in the $501 to $1000 range are most common, offered by 43% of companies. Only 15% offer very low ($100 – $500) or very high (over $2000) stipends.
The average stipend also differs by employee seniority, role, and location. For example:
- Entry-level employees receive around $500
- Mid-level employees receive around $1000
- Senior managers receive around $2000
And stipends tend to be higher in areas with higher costs of living, like San Francisco and New York City.
How has COVID-19 impacted work-from-home stipends?
The COVID-19 pandemic dramatically increased the number of remote employees. This drove up demand for work-from-home stipends. Key trends include:
- More companies are offering stipends – In 2019, around 25% provided stipends versus 60% in 2020.
- Higher stipend amounts – Average stipends rose from around $500 per year pre-pandemic to around $1000.
- More comprehensive coverage – Stipends now cover more categories like furniture, equipment, utilities, and supplies.
Many companies realized employees needed more support to create home offices quickly. Higher, more comprehensive stipends helped facilitate the abrupt shift to remote work.
Are work-from-home stipends taxable income?
In most cases, work-from-home stipends are considered taxable income by the IRS. This means they are subject to:
- Federal income tax
- State income tax
- Payroll tax (Social Security, Medicare, etc.)
However, some stipends may qualify for tax exemption if they are deemed a reimbursement by the IRS. For example, stipends that:
- Are directly based on actual home office expenses incurred
- Do not exceed documented expenses
- Require extensive recordkeeping and submission of receipts
But because most stipends are fixed amounts unrelated to actual costs, the majority do count as taxable income. Employees who receive work-from-home stipends should plan for taxes accordingly.
Frequently Asked Questions
Should I ask for a work-from-home stipend?
If your employer does not currently offer a stipend, consider reaching out to request one, especially if you are now working remotely due to COVID-19. Explain any new costs you are incurring to work productively at home. Be ready to provide estimates and research showing average stipend amounts.
Are stipends negotiable?
Stipend amounts are often negotiable, especially if you have evidence of higher-than-average costs. Calculate your expected expenses and make a case for increasing the stipend if needed. Some companies may also be willing to adjust stipends higher for strong performers.
Can I submit expenses if my stipend doesn’t cover them?
Some companies allow additional reimbursements if your stipend does not fully cover your costs. Keep diligent records and submit remaining expenses based on your employer’s processes. Be reasonable and strategic in what you submit for reimbursement.
Are stipends worse than reimbursements?
Not necessarily. Stipends provide fixed amounts upfront, while reimbursements require submitting expenses and waiting to get paid back. Stipends also incentivize employees to create productive home offices. Reimbursements may discourage spending without guarantee of repayment.
Should I upgrade my home office if I receive a stipend?
Stipends enable you to upgrade your home office within reason. Focus first on necessities like a solid desk and chair. Only spend stipends on optional upgrades and accessories after you’ve addressed core needs.
Key Takeaways
- Typical work-from-home stipends range from $500 to $2000 per year to cover remote office costs.
- Stipends usually help pay for furniture, equipment, internet, supplies and increased utilities.
- Stipend amounts often differ based on role, seniority, location, and employer budget.
- COVID-19 drove stipends higher as companies supported mass remote work transitions.
- Most stipends count as taxable income, but some qualify for exemption if they reimburse specific expenses.