A stipend is a fixed, regular payment provided to individuals-commonly students, interns, fellows, or trainees-to help cover living expenses or work-related costs during a period of learning, training, or service. A stipend is different from a salary. It's not clocking hours. It's not someone checking your performance and deciding what you earned. It's more a type of support-money meant to make something possible.
You see them a lot in places like universities, nonprofits, and training programs. Situations where you're doing work-research, an internship, learning something new-but the point isn't a paycheck. The point is helping cover the basics so you can actually be there, doing the thing. And understanding how stipends actually work-how they're different from other kinds of pay-matters. Because when you get that right, you stay compliant and are able to support people doing meaningful work, no matter where they happen to be living.
How is a stipend different from a salary or wage?
A stipend isn't the same as a salary or an hourly wage, and knowing the difference matters for compliance and budgeting.
Salaries and wages reflect payment for work performed, often with specific requirements around hours, benefits, and taxes. A stipend, on the other hand, is typically a support payment for someone participating in education, training, or research. In other words: Salaries pay for job performance; stipends fund opportunity.
The following table breaks down the difference:
| Category | Stipend | Salary or wage |
|---|---|---|
| Purpose | Supports living or training expenses | Compensation for work |
| Amount | Fixed (not based on hours worked) | Based on hours, performance, or role |
| Taxable | Often taxable but varies by region | Generally taxable |
| Employment status | May not imply formal employment | Typically includes employment |
| Benefits | Rarely includes benefits | Often includes benefits (e.g., PTO, insurance) |
Stipends usually don't include employment benefits or tax withholdings (though local rules differ). However, that doesn't mean that stipends aren't taxable-they often are. Recipients are generally responsible for tracking and reporting stipend income.
Tax treatment depends on the country and nature of the stipend. In some regions, stipends may not be subject to standard payroll taxes but may still be reported as income. For global teams, that means checking each country's regulations to ensure a stipend doesn't accidentally cross into "employment" territory and trigger payroll obligations.
Common use cases for stipends
Stipends show up in all kinds of professional and educational settings. Employers and organizations use them to support people gaining experience, training, or contributing to meaningful work outside traditional employment structures.
Here are some of the most common ways stipends are used across the globe:
- Education. Graduate students or teaching assistants receive stipends for research or instructional duties.
- Internships. Interns may be given stipends instead of hourly wages, especially in nonprofit or academic settings.
- Fellowships. Research or professional fellows often receive stipends to support project-based or developmental work.
- Training program. Trainees or apprentices may get stipends to help with transportation, housing, or meals during their program.
- Volunteer or service roles. Organizations may offer stipends to offset personal costs for individuals participating in humanitarian, civic, or missionary work.
Some employers of remote workers offer their talent a remote work allowance to offset work-from-home expenses. This allowance is occasionally referred to as a stipend.
Benefits of offering stipends
For organizations
Stipends open the door to a wider pool of talent. They allow you to engage students, recent graduates, and early-career professionals who bring fresh perspectives and enthusiasm-but might not yet fit into a full-time role. Offering a stipend makes opportunities more accessible to individuals who might otherwise be unable to participate, helping you attract diverse candidates from around the world. Consider the case of Canada: Their generous stipends for PhD students are luring international students to study there.
Stipends also give your organization a way to launch programs or initiatives without the administrative weight of formal employment. Whether you're running a research project, mentorship program, or community partnership, stipends make it easy to provide fair financial support while staying clearly within regulatory guidelines for non-employment arrangements.
Finally, stipends bring flexibility to project-based or short-term engagements. You can fund specific deliverables, learning periods, or internship cycles without committing to long-term payroll costs.
For recipients
For recipients, a stipend can make professional growth more attainable. It helps ease the financial pressure that often comes with unpaid or low-paid programs, covering basics like housing, meals, or transportation. Stipends also give participants the freedom to focus fully on learning, training, or contributing-without juggling multiple jobs just to make ends meet.
On top of that, receiving a stipend-backed opportunity can serve as a career launchpad. The skills, connections, and hands-on experience gained in these programs often end up enhancing resumes and opening doors to potential employment opportunities.
FAQs
Is a stipend considered income?
Yes, in most cases. While stipends are not wages, they are often considered taxable income and should be reported accordingly.
Do stipend recipients get employee benefits?
Typically, no. Since stipend recipients are usually not formal employees, they generally do not receive benefits like health insurance or paid leave.
Can a company pay a stipend instead of a salary?
Only in non-employment contexts. Companies must pay wages to employees who perform work duties. Stipends are reserved for roles with limited or no formal employment responsibilities.
Is a stipend the same as a scholarship?
Not exactly. A scholarship usually covers tuition or academic costs, while a stipend helps with living or training expenses and may be provided alongside a scholarship.
Who is eligible to receive a stipend?
Eligibility varies by program or organization, but common recipients include interns, students, fellows, and trainees engaged in developmental or academic work.
Make paying stipends simple
As a global Employer of Record (EOR) service provider, Pebl handles the hard stuff. The legal details. Payroll. Compliance. All the things that get complicated the moment you start hiring across borders.
And you? You can focus on the work itself-building great programs and nurturing talent. Whether you're offering stipends to interns, fellows, or trainees, launching short-term projects, or hiring full-time employees, Pebl ensures every payment and process stays compliant, wherever your people are.
Connect with Pebl today to create opportunities that grow your people and your business.
Disclaimer: This information does not, and is not intended to, constitute legal or tax advice and is for general informational purposes only. The intent of this document is solely to provide general and preliminary information for private use. Do not rely on it as an alternative to legal, financial, taxation, or accountancy advice from an appropriately qualified professional. The content in this guide is provided "as is," and no representations are made that the content is error-free.
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