Compt is built to manage all three seamlessly. The platform automates IRS and local tax classifications, syncs with payroll systems like ADP, Workday, Gusto, and UKG for proper withholding, and supports reimbursements in 75+ countries, all while maintaining SOC 2 Type II, ISO 27001-2022 certifications and GDPR compliance. Whether you’re reimbursing wellness expenses in the U.S. or professional development in London, Compt keeps every transaction compliant. 

Learn more on our How It Works page.

Most 2026 tax updates extend existing policies, but a few key changes matter for HR and Finance teams:

–Student loan repayments remain nontaxable up to $5,250 per year, now permanent.
–Dependent care accounts increased to $7,500, effective January 2026.
–Bicycle commuting and moving expenses stay taxable. Other commuting nontaxable benefits remain indexed to inflation. 

Compt’s reimbursement model assigns these taxable and nontaxable categories so you stay compliant without manual tracking.

Nontaxable stipends include commuter, internet, cell phone, and qualifying professional development or student loan repayment benefits. Taxable ones cover personal categories like wellness, food, or travel. According to our 2025 Midyear Benchmark Report, about 78% of stipend spend is taxable — and Compt automates that classification for you.

Learn more in our guide to taxable and nontaxable benefits.

Compt’s reimbursement engine can code each submission according to IRS Publication 15b and local tax laws. Taxable reimbursements are pushed through payroll for accurate reporting on income, while nontaxable reimbursements are properly excluded from income. The result: full compliance, zero manual reconciliation.

Absolutely. Compt’s all-in-one platform lets you combine both within a single Lifestyle Spending Account (LSA). For example, you might include taxable wellness benefits alongside nontaxable internet or student loan support. Compt handles the classification, approval workflows, and payroll reporting automatically.

In most cases, yes — LSAs and lifestyle stipends are treated as taxable income unless they fall under IRS-approved exclusions (like student loan repayment or certain commuter benefits). Compt’s platform allows employers the ability to classify expenses according to the right tax treatment, ensuring accurate payroll reporting without manual work.

Taxable stipends appear in Box 1 of an employee’s W-2 as additional wages. Nontaxable reimbursements are recorded as reimbursements, excluded from tax. Compt syncs these details with payroll so W-2 reporting stays accurate and effortless for HR.

Lifestyle Spending Accounts are typically coded under a “fringe benefits” or “employee recognition” expense line in your GL. Nontaxable portions of benefits can be coded to respective categories (i.e. student loan repayments or cell phone expenses), usually based on how your Company’s GL is set up. Finance teams can utilize Compt’s many reports to simplify tracking and provide the necessary audit trail. 

Unlike debit-card LSAs or gift-card marketplaces, Compt is reimbursement-based. This means every transaction includes a receipt, category, and audit trail. This transparency eliminates tax ambiguity and ensures accurate year-end reporting. You’ll never worry about miscoded purchases or card misuse; debit cards in particular create a messy employee experience because of their lack of clarity around reimbursement categories. 

See “Best Employee Benefits Software 2026: If It’s a Reimbursement, Compt Covers It” for more details.

Each country sets its own taxable-benefit thresholds. For example, in Canada most lifestyle stipends are taxable unless they meet CRA wellness exemptions; in the UK, HMRC treats stipends as “benefits in kind” unless specifically excluded. Compt can assist companies with different classifications according to local tax law and report them in local currency, so global teams receive consistent yet compliant support. (Local tax law must be determined by the company. Compt cannot provide tax advice.) Employees can make eligible purchases from any vendor in the 75+ countries in which we do business, and Compt manages the conversions, tax codes, and reporting for HR and Finance. The result is a single, equitable benefits experience for every employee, everywhere.

Use a platform that evolves with them. Compt automatically updates tax logic for IRS rule changes — including the 2026 adjustments to inflation, student loans, and dependent care — so your programs stay accurate year-round. Compliance audits, payroll syncs, and IRS reporting are all built in.

Reimbursements create a clear audit trail, which is crucial for IRS compliance (as well as employee trust). Every expense in Compt includes proof of purchase and category verification, ensuring your benefits are transparent, compliant, and ready for audit — without the gray areas that come with prepaid cards or point marketplaces.

They complement them. LSAs and lifestyle stipends expand beyond traditional fringe perks by letting employees choose what fits their lives, while Compt ensures each reimbursement stays compliant under fringe-benefit tax rules.

Lifestyle Spending Accounts (LSAs) are post-tax benefits and separate from tax-advantaged accounts like HSAs and FSAs. Because Compt only reimburses expenses after taxes, it doesn’t interfere with HSA eligibility or trigger “double-dipping.” HR simply defines which categories qualify, and Compt enforces those rules to keep every reimbursement compliant.

Yes, in some states. California, Illinois, and a few others require employers to reimburse necessary business expenses such as phone, internet, or equipment used for work. Compt helps ensure compliance by letting you set up a separate remote-work stipend that meets state requirements while remaining easy to track and tax-classify correctly.

If the expense is necessary for work, it’s generally nontaxable under IRS § 62(a)(2)(A) and state equivalents. Compt lets HR label those categories as business expenses so they can be reimbursed through payroll, tax-free, while personal-use items (like a new chair for home comfort) can remain taxable to keep compliance clear.

Taxes are only withheld after reimbursement, not when a stipend is allocated. Because Compt operates on a reimbursement model (not preloaded funds), taxable amounts are included in payroll once the expense is approved and paid. This ensures accuracy and prevents premature withholding.

No, Compt LSAs aren’t group health plans because they don’t reimburse medical or insurance-covered expenses. That keeps your program outside ERISA, HIPAA, and COBRA requirements. As long as you broaden categories to lifestyle and nonmedical expenses, Compt ensures your LSAs stay compliant and low-risk.

Learn more in “Expanding Employee Access to GLP-1 Weight-Loss Drug Coverage With Stipends and LSAs.”

No. Because LSAs are not pre-tax benefits, they’re not subject to IRS nondiscrimination testing. That gives employers flexibility to offer different stipend amounts by role, location, or employment type. Compt helps you document and communicate those distinctions clearly for transparency and equity.

You can, but they’re treated differently for tax purposes. For contractors, stipends are considered taxable compensation and reported on Form 1099. Compt can support this use case, but most companies limit LSAs to W-2 employees to simplify compliance.