What Work-From-Home Expenses Should Employers Reimburse?

Employers should reimburse work-from-home expenses employees must pay out of pocket to do their jobs, typically core equipment plus the business portion of internet and phone costs. Requirements vary by state, so where your employees work matters as much as what they spend. Here's what growing teams cover and how tax rules shape your decisions.

What employers typically cover

Work-from-home reimbursements cover expenses an employee personally incurs to do their job, typically required equipment plus a share of internet or phone costs. For a 50 to 200 person team, keeping categories tight makes approvals consistent and audit-friendly. Documenting reimbursable items, spending caps, and receipt requirements upfront prevents one-off exceptions, and we recommend anchoring your list to clear procurement practices. Most growing teams organize reimbursements into three categories:

• Equipment and technology: Laptops (if not company-issued), monitors, keyboards, webcams, and headsets are the baseline. A standard bundle or approved vendor list reduces edge cases.
• Internet and phone: When home internet is required for video calls or secure access, reimbursement covers a reasonable business portion. A flat stipend avoids partial-bill reviews, and phone reimbursement follows the same logic when work calls or authentication are required.
• Furniture and supplies: Furniture is often optional unless tied to an ergonomic accommodation, and pre-approval above a set dollar threshold prevents budget surprises. For supplies like paper and ink, a small cap plus receipts keeps work supplies separate from household items.

With your categories set, the next question is how state law and taxes affect what you actually owe.

How state law and tax rules change the answer

State rules determine what counts as "necessary," so we anchor decisions to where each employee works. California's standard is broad under CA Labor Code 2802, Illinois takes a similar approach under the IL Wage Payment and Collection Act, and New York often turns on whether reimbursement was promised in policy or agreement (see the NY DOL FAQ). With a multi-state workforce, one conservative baseline beats location-by-location rules.

Tax treatment depends on how you structure your plan. Under an accountable plan, reimbursements are generally non-taxable to employees and deductible when IRS substantiation rules are followed, meaning timely receipts, a documented business purpose, and return of any excess advances. Keeping reimbursement workflows separate from wage payments helps records stay clean, and our guide on common bookkeeping mistakes covers related pitfalls.

Keeping reimbursements organized as you scale

The real challenge isn't deciding what to reimburse, it's keeping the process clean as your team grows across states and categories. When reimbursements run alongside corporate card expenses and payroll filings, manual tracking breaks down fast.

Spend management platforms like Ramp handle receipt matching and categorization in one workflow so nothing slips through during close. If you're also evaluating your corporate card setup, pairing the right card with a solid reimbursement policy means both run on autopilot.

Frequently asked questions about work-from-home reimbursements

Are remote work reimbursements taxable?

Not if you use an IRS-compliant accountable plan, which requires a documented business connection, timely substantiation, and return of any excess payments. Without one, reimbursements become taxable wages and cost you additional payroll taxes.

Do all states require employers to reimburse remote workers?

No. California, Illinois, and a handful of other states have explicit requirements. Most states don't mandate it, but a written policy protects you either way and helps attract remote talent.

Should we use stipends or actual-expense reimbursement?

Stipends are simpler to administer and avoid partial-bill reviews. Actual-expense reimbursement gives you more control for audits. Most growing teams use stipends for internet and phone, then actual-expense reimbursement for equipment.

How do we handle reimbursements for multi-state teams?

Start with the strictest state requirement your team operates in and apply it as your company-wide baseline. This avoids separate policies per state and reduces compliance risk as you hire into new locations.