Travel stipend policy: a quick guide

18 Oct 2021 · 8 MIN READ

Last updated: May 2026Want to support your employees' wanderlust of travel? Perfect. Travel helps employees recharge, disconnect, and enter the workplace with new motivation.Whether you're building a paid leave program from scratch, already have one, or are looking to support employee travel for 'bleisure' (business travel, bookended with leisure travel) or free time travel; it's essential to create an employee travel stipend policy to support your team. This policy helps you to set clear expectations, improve talent retention, and be at the forefront of employee benefits.Here's a quick guide on what this policy should contain, including types of personal expenses like per diem allowance, your reimbursement policy, tax laws, and more.
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What does a travel stipend mean?

A travel stipend is a fixed sum of money employers provide at regular intervals to help employees cover personal travel costs.This type of stipend is not meant to cover all expenses of an employee's trip—it's meant to ease the burden and contribute toward it in some way.The key difference between a travel stipend and a business travel reimbursement is that a stipend supports personal leisure travel, while a reimbursement covers expenses incurred during company-required work trips.

What is a travel stipend policy?

A travel stipend policy is a document that outlines the rules and regulations for employees to use company-allotted funds for personal travel expenses.It's also known as a vacation stipend policy, travel reimbursement policy, or leisure travel policy. Employees have the freedom to spend this fund for vacation at their discretion during a calendar year.Since no federal or state laws require companies to offer a personal travel stipend, you can easily create policies of your own. Some companies prefer to start small and gradually build their travel stipend program to offer maximum amounts through their stipends. Others prefer to go all-in from day one—this article should help you decide what's the best fit for your business.

What are the benefits of offering employee stipends?

Employee travel stipends create a win-win: your team stays motivated, and your company strengthens its culture and retention.It's a method to keep them motivated and satisfied with their role knowing their workday is contributing to more than just their salary.Some businesses, especially early-stage self-funded startups, can be deterred from offering a travel stipend policy. It screams extra costs, and founders often expect covering travel expenses of employees to be out of reach.However, there are ways to keep things affordable and flexible. Here are the benefits of offering employee stipends:
  • Improved job satisfaction
  • Boost employee productivity
  • Attract and retain the best talent
  • Reduced healthcare benefit usage
  • Fewer compensation claims and sick days

What does a travel stipend policy cover?

A travel stipend policy covers the types of personal travel expenses your company will help fund, from airfare to meal costs.There are no strict rules about what you can and can't include. It is this flexibility that makes it possible for companies to create unique stipend policies. Whether you want to offer fringe benefits or offset funds, it's totally up to you—and at your company's discretion.Here are some of the most common things that a travel stipend policy can cover:
  • Passport fees
  • Per diem rates
  • Meal expenses
  • Leisure activities
  • Hotel room cost
  • Incidental expenses
  • Car rental expenses
  • The actual cost of airfare
  • Mileage reimbursement
  • Allowance for hotel room expenses
  • A prepaid cell phone card for personal use
  • Inter-state travel-related expenses like tolls
  • Fuel expenses on personal vehicle for road trips
  • Other personal expenses like event registration fees
  • Remote commuting expenses (for example, if your employee chooses to work from a destination office)
No matter how many items you plan to cover from the list above, the first step is to get buy-in from the finance department, HR team, and senior management. One way of doing this is by clarifying a travel stipend's tax implications.
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When are travel stipends tax-free?

Travel stipends are tax-free when employees follow an accountable plan—meaning they document expenses and return any unused funds.Under IRS (Internal Revenue Service) standards, travel stipends are not considered regular income in these cases. Your company may choose to cover the tax implications or pass it on to employees. Make sure your travel stipend policy clearly states tax laws, if any, and who is liable to pay what.

When are travel stipends taxable?

Travel stipends count as taxable income when your company uses a non-accountable plan, where employees don't need to document expenses or return unused funds.In such cases, employees can simply spend the stipend without documentation and are not required to return the unused portion. If this is the case, travel stipends will fall under your taxable income and be subject to FICA taxes. You can find the details on the W-2 form .It's better to keep track of stipend expenses and consult an income tax audit expert or the internal accounting team for further tax purposes.

Is a travel stipend necessary and how much should it be?

Travel stipends are not required by law—but they can significantly boost employee satisfaction and productivity.The federal government doesn't require companies to pay travel stipends to employees. Businesses often confuse having to cover employees taking a business trip and having business travel expenses on their hands, with an optional travel stipend policy to support leisure travel. A stipend isn't compulsory, business travel expenses are.That being said, travel stipends certainly add to the satisfaction and productivity of employees. Using an employee benefits platform can streamline the way you manage and reimburse employee stipends.The amount of your stipend really depends on your company's budget and the intended use of spend. Here's what some well-known companies offer for annual travel stipends (figures publicly reported as of 2021):
  • Airbnb: $2,000
  • Evernote: $1,000
  • TourRadar: $1,800
  • Afar Media: $2,000
  • Bamboo HR: $2,000
The average annual travel stipend among these companies is $1,760. You can use these figures as a rough benchmark for your own stipend offering.

What should a travel stipend policy include?

A complete travel stipend policy should clearly define eligibility, amounts, covered expenses, and the reimbursement process.Here are the key components to include:
  1. Stipend amount: Define the annual or monthly stipend value.
  2. Eligibility criteria: Specify which employees qualify (e.g., full-time, after probation period).
  3. Covered expenses: List what the stipend can be used for (flights, hotels, meals, etc.).
  4. Reimbursement process: Outline how employees submit receipts or expense reports.
  5. Tax treatment: Clarify whether the stipend is taxable and who handles tax obligations.
  6. Approval workflow: Describe any manager or finance approval steps required.
  7. Unused funds: State whether unused stipend amounts roll over or expire.

How do travel stipends work?

Travel stipends can be distributed as a fixed deposit, reimbursed against receipts, or loaded onto company cards—whatever fits your team best.There are companies that offer different stipend amounts based on seniority or performance. How you want to offer the stipend is up to you. It can certainly be an incentive to have an increased travel stipend the longer you're with a company or the more senior you are. However, it can also be seen as more fair if everyone gets the same.You can have employees submit receipts for reimbursement or deposit a fixed amount in their bank accounts. You can even offer a standard mileage rate or issue company credit cards. It's whatever works best for your business model and finance team.If you are reimbursing travel expenses, make sure to mention the processes to follow for submitting the employee's expense report.

How to create a travel stipend policy: step-by-step

  1. Get stakeholder buy-in: Align with finance, HR, and senior management on budget and goals.
  2. Define the stipend amount: Decide on an annual or monthly figure based on your company's budget.
  3. Set eligibility criteria: Determine which employees qualify for the stipend.
  4. List covered expenses: Specify what the stipend can and cannot be used for.
  5. Clarify tax treatment: Work with your accounting team to determine taxability and communicate it clearly.
  6. Establish the reimbursement process: Decide whether employees submit receipts, receive a fixed deposit, or use company cards.
  7. Document and communicate: Write the policy clearly and share it with your team.
A travel stipend program makes a statement for your company culture. Plus, it's a great way to offer and showcase the strength of your employee perks. While creating a stipend policy, make sure all rules related to actual expense reimbursement are clearly outlined.If using a business travel management tool like Perk , you can pass on business miles, additional savings on flight tickets and hotels, and support your travel stipend offering. See what Perk can do for your policy today.
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