Is a stipend considered a wage or a salary?

No, a stipend is considered neither a wage nor a salary. However, in certain circumstances, it can be considered an addition to a salary if it's part of your benefits package. Stipends are considered separately from wages or salaries, meaning that it's taxed differently.

Are stipends subject to taxes?

Yes, stipends are subject to taxes. However, it's not taxed as income, meaning that the way that it's taxed is different for both the payer and payee. As it's not counted as a wage earned, no taxes are withheld from it, meaning that you will be required to pay that yourself on your taxes.As it isn't considered a wage, you won't have to worry about income tax, especially as stipends also tend to be much lower than either wages or salaries.

Stipend Vs. Salary: What’s The Difference?

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There are several different ways that employees and other workers get paid. The best-known ones are salary and wages, but stipends are another specific type of pay. The exact differences between them and how to categorize each type of payment can get a bit confusing.

First of all, a stipend and a salary aren’t the same. Some specific occupations, such as a member of the clergy, can be paid a stipend instead of a salary, but they still aren’t the same. They also aren’t mutually exclusive. As a matter of fact, you can get both.

Stipends are most often paid out to cover expenses. Such as, you’ll get a stipend on a business trip to cover meals. As a rule, it’s a fixed lump sum. A salary, on the other hand, is a regular payment for your services. Your employer pays your salary on a schedule, while a stipend doesn’t need to be.

Key Takeaways:

Stipend	Salary
A sum paid upfront for services or to defray costs.	A set amount of money paid for work, usually calculated yearly but paid out on a schedule.
Stipends are often given to those who aren’t working a waged job, such as students, interns, clergy, or researchers.	A salary is given to someone who is working a set job with a set number of hours. It’s a fixed amount that doesn’t vary depending on hours.
Stipends tend to be low. They help with expenses but don’t always cover them completely.	Salaries, as a rule, tend to be higher. It varies depending on the kind of job you work, but salaried workers tend to make decent money.
Is derived from Latin from the word stipendium. It is derived from the word “gift” and “to pay,” so a gift of money.	It is also derived from the Latin word salārium, which means official pay to someone in a military or civil post.

What Is a Stipend?

A stipend is defined as “a fixed sum of money paid periodically for services or to defray expenses.” The term stipend is most often used to convey the second part of the definition, as in, it defrays or covers the expenses you accrue.

Stipends are most often given out to students, members of the clergy, or interns. A stipend is meant to help cover the cost of living in these circumstances as the person takes on their task. In the case of interns, it helps cover expenses while you learn in what would otherwise be an unpaid position.

The main attribute that defines a stipend is that it’s given in advance. It’s also not compensation for work done. While it may cover certain services, such as for a member of the clergy or work that an intern does, that’s not its primary purpose. It’s not meant as a wage or a salary that is paid for work done.

Stipends don’t have to just cover living expenses. Companies or other organizations can offer a stipend to cover a particular cost. For business travel, you may be given a stipend if they don’t do reimbursement or a company credit card. They can also be offered for wellness, such as being given a stipend to cover a gym membership or exercise class.

They can also be offered for job training or education. Some companies or organizations will give you a stipend to get certifications or take classes related to your profession.

The word’s first recorded usage was in the 15th century, and its meaning hasn’t changed. It came from the Latin word stipendium, which was composed of stip- and pendre. The first part, stip or stips, means a gift, and pendre means to weigh or to pay.

What Is a Salary?

A salary is defined as a “fixed compensation paid regularly for services.” Salaried employees are paid a certain amount per period (which can be weekly, biweekly, bimonthly, or monthly) for their work.

Salaries don’t vary depending on hours, so long as you keep up with your work. This means that unless the circumstances are extreme, salaried workers aren’t entitled to overtime pay, unlike wage-based workers. But it also means that you get paid the same if you have a lighter week and work fewer hours.

Salaries, however, aren’t meant to defray costs – they’re your primary income from the work you perform. Full-time employees are usually salaried, and it’s taxed as work income, which means that you have to pay into Social Security, Medicare, and the income tax for your tax bracket.

A salary is simply the amount of money that you are paid, usually calculated per year. Other types of compensation, such as health insurance, bonuses, and other perks, aren’t included.

The word salary originates from the Latin word salārium, which means “official pay given to the holder of a civil or military post. It’s a noun derivative from the neuter form of salārius, meaning of or relating to salt. This led to the idea that soldiers were given “salt money” or money to pay for salt, which is likely false.

There is some speculation that early Roman soldiers may have been paid in salt, but there isn’t any sufficient evidence to back it up. From Latin, the word made its way into Anglo-French and became the Middle English salarie, meaning compensation or payment. Its first recorded usage was in the 13th century.

Stipend vs. Salary FAQ

Is a stipend considered a wage or a salary?

No, a stipend is considered neither a wage nor a salary. However, in certain circumstances, it can be considered an addition to a salary if it’s part of your benefits package. Stipends are considered separately from wages or salaries, meaning that it’s taxed differently.
Are stipends subject to taxes?

Yes, stipends are subject to taxes. However, it’s not taxed as income, meaning that the way that it’s taxed is different for both the payer and payee. As it’s not counted as a wage earned, no taxes are withheld from it, meaning that you will be required to pay that yourself on your taxes.

As it isn’t considered a wage, you won’t have to worry about income tax, especially as stipends also tend to be much lower than either wages or salaries.

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Author

Di Doherty

Di has been a writer for more than half her life. Most of her writing so far has been fiction, and she’s gotten short stories published in online magazines Kzine and Silver Blade, as well as a flash fiction piece in the Bookends review. Di graduated from Mary Baldwin College (now University) with a degree in Psychology and Sociology.

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