What’s a travel stipend? All you need to know

As many industries move toward hybrid workplace models, employees are more mobile than ever––they often need to attend offsite events or want to make the most of their work flexibility. A travel stipend is a great way to support distributed or conventional workforces by allowing employees to roam. 

In this guide, we’ll explore how travel stipends work, their benefits, and tips for implementing an effective policy.

What’s a travel stipend?

A travel or vacation stipend is a financial allowance employers provide to cover travel-related costs incurred by employees. This stipend type is one of many employers can use for various purposes: 

• Health and wellness stipends cover the costs of fitness center memberships, massages, or at-home health equipment.
• Career development stipends cover expenses like courses, certifications, workshops, and other training opportunities.
• Remote work stipends help employees prepare work-from-home setups, such as purchasing monitors or sit-stand desks. 
• Childcare stipends alleviate the (often costly) childcare expenses for parents and guardians of young children.

Companies can customize their stipend policies to align with their values, priorities, and budget. For instance, a sustainability-focused business might offer eco-friendly travel options like bike-sharing programs or public transit passes, and a company that prioritizes professional growth could provide stipends for industry conferences.

What does a travel stipend cover?

A travel stipend can cover a wide range of employee travel expenses, giving employees flexibility and financial support when they travel. Here are some examples of costs that a travel stipend may include.

Transportation 

Travel stipends often cover transportation costs, such as transit fares, train tickets, ride shares, or flights for domestic or international travel. Employers may set limitations based on frequency, cost, or distance. For example, your company may only cover economy-class flights.

Gas expenses

Gas expenses are a typical cost covered for employees who use their own vehicle or rental car. Employers may cap this coverage based on standard mileage and require travel documentation.

Dining allowances 

Travel stipends can include meal allowances to cover dining costs during the employee’s work-related trips. Guidelines may consist of daily spending caps or exclusions for alcoholic beverages.

Lodging expenses 

Companies often help cover accommodations, such as hotels, hostels, and short-term housing rentals. If you want the best deals on company hotel bookings, businesses can save by joining programs like Engine, which offers discounted corporate travel rates.

Typical travel fees 

These may include baggage fees, parking charges, road tolls, or flight seat upgrades. Employers might provide a flat rate or require pre-approval for premium services.

Incidental expenses 

Incidentals include small unforeseen travel costs like toiletries or emergency travel items. Employers often set a maximum amount for incidental expenses in policies to avoid misuse.

Benefits of offering a travel stipend

Travel stipends are more than just a financial perk for employees—they’re a strategic investment in your workforce. Here are a few key benefits of offering travel stipends:

• Improved job satisfaction: Travel stipends ease the financial burden of work-related travel, allowing employees to focus on the trip’s purpose.
• Boosted morale: With access to a travel stipend, employees are more likely to take trips and return feeling refreshed without worrying about financial strain.
• Increased recruitment: Travel stipends make your company attractive to new talent. The work-life balance and flexibility a stipend provides show that your company supports its staff.
• Employee retention: If an employee loves to travel, they’ll remain loyal to an employer that offers a stipend. And a workplace with high loyalty and satisfaction will keep the best employees longer. 

How to offer a travel stipend

Here are some key steps to take so your travel stipend aligns with your company’s philosophy and provides value to your employees.

Establish your goals

Before introducing a travel stipend, define your goals. Are you trying to attract job seekers or promote work-life balance for your senior staff? Setting clear goals for your travel stipend policy ensures it positively contributes to your company’s broad objectives.

Involve relevant departments

Work with human resources, finance, legal, and management departments to create and refine the policy. To streamline this process, consider a committee of subject matter experts—collaborative input helps the policy cover all the bases.

Identify coverage specifics

Clearly outline what expenses the stipend covers. Explain how employees can access the policy stipend—this may be through direct lump-sum payments, reimbursements, or another method. Then, note any documentation required for reimbursements.

Consider a travel and lodging partner 

To simplify the process, partner with a travel and lodging provider to manage bookings and payments. A service like Engine can streamline these tasks, lowering costs and anxiety while offering consistent, discounted rates.

Effectively communicate the policy

Once you finalize the policy, ensure you communicate it clearly to employees. Use multiple communication channels, such as email, company intranets, or employee handbooks, to make the information easy to find. And hosting a Q&A session or providing examples of covered expenses helps employees fully understand the benefits and maximize their use.

Simplify business travel with Engine

A stipend supports business trips best when paired with a dedicated travel platform like Engine. It provides employees access to over 750,000 hotels worldwide, making finding accommodations easy. And Engine offers dedicated support throughout the booking procedure, helping companies create a more efficient and enjoyable travel plan for their teams. 

Get started with Engine today to make booking business travel hassle-free.

FAQs

What’s it called when a company pays for your travel?

It’s called a “company-paid trip” and means travel was covered via a travel allowance or stipend. Depending on the policy, your employer may cover transportation, accommodations, or other expenses.

How do I track and manage travel stipends?

You can track and manage your travel stipends using internal HR systems or expense management platforms. These platforms allow employees to submit requests or receipts for approval by the appropriate department. Automating the process ensures timely payments, helps you maintain accurate records, and reduces administrative work. 

Can travel expenses be rolled over if not used in the calendar or fiscal year?

Stipend rollover depends on your company’s policy. Some employers allow unused stipends to roll over into the following calendar or fiscal year, allowing the employee more flexibility. Others have a “use it or lose it” policy, where the employee must use the funds by a specific date. 

Are travel stipends taxable?

Travel stipends aren’t considered regular, non-taxable employee income. They’re generally subject to IRS guidelines on taxable fringe benefits. But if a company offers stipends under an accountable reimbursement plan, the stipend can be excluded from employees' gross income—it won’t be reported to the IRS as taxable wages.

If stipends are paid under a nonaccountable plan, they’re considered wages and must be reported on the employee’s W-2 form. Additionally, per diem stipends must adhere to federal per diem rates, and any excess must be reported as taxable wages. Managing travel stipends under an accountable reimbursement plan is recommended to avoid tax issues.