Tax guide

Travel Nurse Stipend Rules IRS 2026: Complete Tax-Free Stipend Guide

Tax-free stipends are one of the biggest financial advantages for travel nurses, but the IRS rules are strict. This guide explains exactly how to qualify for tax-free stipends and stay compliant in 2026.

What Are Tax-Free Stipends?

Travel nurse stipends are payments for housing and meals that are tax-free up to GSA per diem rates, as long as you meet IRS requirements. This can save you thousands of dollars in taxes annually.

Example: If you receive $1,500/week in tax-free stipends, that's $78,000/year in tax-free income. At a 24% tax rate, that's $18,720 in tax savings.

IRS Requirements for Tax-Free Stipends

To qualify for tax-free stipends, you must meet all of these requirements:

1. Maintain a Tax Home

You must have a permanent residence (tax home) where you:

• Pay rent or mortgage
• Pay utilities
• Maintain belongings
• Return to between assignments

2. Work Away from Tax Home Temporarily

Your assignment must be temporary (typically under 1 year). If you work in the same location for more than 1 year, the IRS considers it your new tax home.

3. Duplicate Expenses

You must pay for housing and meals at both your tax home and assignment location simultaneously. This is the "duplicate expenses" requirement.

4. Stipends Within GSA Limits

Tax-free stipends are limited to GSA per diem rates for your assignment location. Amounts above GSA rates are taxable.

GSA Per Diem Rates Explained

The General Services Administration (GSA) sets maximum per diem rates for each location. These rates determine the maximum tax-free stipends you can receive.

GSA Rate Components

• Lodging: Maximum tax-free housing stipend per day
• Meals & Incidentals: Maximum tax-free meal stipend per day
• Miscellaneous: Small incidental expenses

Weekly Maximums: Multiply daily rates by 7 to get weekly maximums:

• Weekly Housing Max = GSA Lodging Rate × 7
• Weekly Meals Max = GSA Meals Rate × 7

Use our Stipend Auditor to check if your agency is offering the maximum tax-free stipends.

What Happens If You Don't Meet Requirements?

If you fail to meet IRS requirements, all stipends become taxable income:

Example: If you received $78,000 in stipends that become taxable, and you're in the 24% tax bracket, you'll owe $18,720 in additional taxes—plus penalties and interest.

Common Stipend Mistakes to Avoid

1. Not Maintaining a Tax Home

If you don't have a permanent residence with ongoing expenses, you don't have a tax home. All stipends become taxable.

2. Not Duplicating Expenses

You must pay for housing at both locations. If you sublet your tax home or don't pay rent there, you fail the duplicate expenses test.

3. Accepting Stipends Above GSA Rates

Any stipend amount above GSA rates is taxable. If your agency offers $2,000/week housing but GSA max is $1,500/week, the extra $500/week is taxable.

4. Working in Same Location > 1 Year

If you extend assignments in the same location beyond 1 year, the IRS may consider it your new tax home, making all future stipends taxable.

5. Poor Record Keeping

If audited, you must prove you maintained a tax home and duplicated expenses. Without receipts and records, you'll lose the tax-free status.

How to Ensure Compliance

1. Maintain Detailed Records

• ✅ Rent/mortgage receipts at tax home
• ✅ Utility bills at tax home
• ✅ Housing receipts at assignment location
• ✅ Contracts showing stipend amounts
• ✅ Calendar showing time spent at tax home
• ✅ Bank statements showing duplicate expenses

2. Use Our Tax Home Risk Assessment

Take our Tax Home Risk Assessment to evaluate your compliance risk.

3. Consult a Tax Professional

Consider hiring a tax professional specializing in travel healthcare, such as TravelTax.com.

Stipend Negotiation Tips

Don't accept stipends below GSA maximums. Here's how to negotiate:

1. Know the GSA rates: Use our GSA Rates tool to find maximums for your assignment location
2. Audit your offer: Use our Stipend Auditor to see if you're being shortchanged
3. Negotiate up: If your offer is below GSA max, ask for the maximum
4. Compare agencies: Some agencies consistently offer higher stipends

2026 IRS Updates

As of 2026, there are no major changes to travel nurse stipend rules. However, GSA rates are updated annually in October, so always verify current rates.

Key Reminder: The Tax Cuts and Jobs Act (TCJA) eliminated most unreimbursed employee expense deductions for W-2 employees, making tax-free stipends even more valuable.

Resources

• Tax Home Risk Assessment
• Stipend Auditor
• GSA Rates by Location
• Tax Deductions Guide
• IRS Publication 463: Travel, Gift, and Car Expenses

Final Takeaway

Tax-free stipends are a huge financial advantage, but they require strict compliance with IRS rules:

1. Maintain a permanent tax home with ongoing expenses
2. Duplicate expenses (pay for housing at both locations)
3. Keep stipends within GSA maximums
4. Keep meticulous records
5. Consult a tax professional if unsure