As more and more companies are looking for creative ways to invest in their people, a professional development account can help foster a culture of continuous learning. 

First off, how are you defining a professional development account? 

A professional development account (also called a ‘professional development stipend’) is a designated employer-funded program that empowers employees to invest in their career growth and skill advancement through their choice of learning opportunities.

Professional development accounts are becoming increasingly vital as companies recognize their role in talent retention, with some reports stating that companies that invest in professional development see as much as 58% increase in employee retention compared to those that don’t. 

What’s more, professional development accounts encompass a wide range of tactics rather than offering a one-size-fits-all approach. Our latest annual Lifestyle Benefits Benchmark Report shows that offering employees ultimate choice is beneficial, with Compt customers choosing to spend their account dollars on more than 2,500 unique professional development vendors. 

Why Professional Development Matters in 2026 

Studies show that when it comes to attracting and retaining top talent, professional development opportunities matter. Creating an environment for high performance means just that: giving employees an opportunity to be high performers through whatever means they choose. 

Gallup recently published a report focused on the importance of employee development, stating that organizations that make a strategic investment in employee development report 11% greater profitability, with greater retention as well. 

Need more proof? The same study named ‘career growth opportunities’ as the No. 1 reason people gave for changing jobs. 

When employees are feeling valued and challenged, they will give more to their organization, fueling a high-performance culture. 

Professional development has no age limit

And this is across generations, too. LinkedIn reports that Gen Z is even more focused on career growth and learning than previous generations, watching 50% more hours per learner of educational content in 2020 compared to the year prior. 

When it comes to Millennials, Deloitte reports that only 36% believe their leadership skills were being developed effectively in their current roles. Gallup highlights this further in a study reporting that only 18% of millennials felt positively about their leadership skills. And let’s not forget about your Baby Boomers too. With the retirement age rising, more and more Boomers are looking to improve their overall technological skills. According to AARP research, 57% of workers over 50 are interested in gaining job skills if their employer requests it. 

Across the generations, it’s clear that upskilling and reskilling is the way forward for many employees, and employers can be equipped to help them.

According to a recent World Economic Forum Study, 58% of employees believe their job skills will significantly change in the next five years due to progressions in AI and big data. 

Companies can get ahead of this by offering professional development accounts and programs with a dedicated fund for employees to take whatever courses or learning opportunities they need, such as developing their leadership soft skills, AI coursework, or even a data analytics workshop to better understand explaining budgets and ROI to their C-suite. 

When it comes to professional development, no one’s path is the same. 

Key Benefits of Professional Development Accounts

A personalized professional development account has a wide range of benefits, and when designed correctly, these benefits extend past the employee to the teams that are deploying the accounts, too. Let’s break it down: 

Top benefits of professional development accounts for employees:

Autonomous learning paths

Rather than being locked into a course library that doesn’t truly help your employee advance, they can pick and choose professional development offerings that work for them. Anything from books, to courses, to networking groups, certifications, etc. The employer sets the guidelines and approval flows, and the employee is free to choose whatever works best for them. 

This helps deliver professional development tools for all levels and departments, rather than trying to find a one-size-fits-all approach, and lets your employees choose what they need. Whether they need to develop soft skills on communication styles or specific courses on upleveling their AI capabilities in their field, it’s all available to them. 

Better job performance

When employees learn more, they develop new skills that will help them in their day-to-day job. That’s the very definition of professional development. By giving greater access and visibility to professional development initiatives, employees will bring these skills and learnings to their everyday challenges, improving overall productivity and efficiency. 

Higher employee engagement

One of the top reasons employees leave a job is no career growth opportunities. Even if there’s no specific promotion available, employees are more likely to stay at a company that’s invested in their own professional development and growth, even laterally. This has a trickle-down effect on how fulfilled they feel at work and prevents them from feeling stagnant or bored. 

Top benefits of a professional development account for employers:

Improving retention and recruitment strategies

Offering professional development as a key benefit for potential employees can attract candidates that are looking to grow with a company, and can prove a company’s loyalty and investment to current employees.  

Increased productivity and efficiency

While individuals and teams will benefit from a more skilled coworker, this has an effect companywide as well. A company with employees who work efficiently and make fewer mistakes or can handle more complex tasks will benefit through greater output and productivity, directly affecting a company’s bottom line.

Succession planning

By spending time and energy developing the leaders of the future, companies can plan to internally promote, reducing recruitment costs for more senior-level positions that can be harder to fill externally. Professional development essentially helps build a pipeline for talent within the company, and keeps institutional knowledge within the company’s ‘four walls.’ 

And for both employers and employees, the tax benefits are advantageous. 

Certain educational and professional development benefits (such as tuition reimbursement) can lower overall taxable income for employees (so they don’t have to pay tax on it), and qualify as a deductible business expense for employers, making it a win-win! 

Examples of Professional Development Account Designs

Professional development is a core focus for companies of all sizes across all industries, particularly those that need to upskill their workforces to complement a surge in AI-related workflows and knowledge. Here are just a few examples of how companies are offering professional development accounts to their people as part of their overall benefits strategy:

1. Help Scout: Help Scout has a “Learn Something Stipend” where each of the near-150 employees are given $1,800 to spend annually on learning.

2. Olark: Olark has a professional development budget of $2,000/year to use on classes, books, software, conferences, etc. — whatever helps their team of 20+ remote employees learn.

3. Balsamiq: Balsamiq gives their 30+ employees $3,000/year to spend on books, classes, or travel, accommodation, and fees for attending conferences.

4. Smartsheet: On the enterprise level, Smartsheet provides their 4,200+ employees $1,000/year to spend on learning-related items.

5. Slack: Also for enterprise tech, Slack’s 3,200+ employees receive $500 annually towards a personal development opportunity of their choice and $2,000 annually for professional development.

6. One of our Compt customers in the financial industry has an annual $5,000 professional development program for 600+ employees that also includes tuition assistance, available to full-time, regular employees. 

7. In the healthcare space, one of our Compt customers has a case-by-case basis program for professional development, where there’s no official budget, but employees can submit their requests for approval. This is mostly used for renewing certifications across their medical professional base of 50+ employees. 

Tuition reimbursement trending upwards

Depending on your organization’s size and budget, what you can offer your employees for professional development can vary. Though it comes at a higher cost, we see many employers recognizing the burden of student debt on employees’ financial wellness. 

According to our 2025 Lifestyle Benefits Benchmark Report, repayment options grew from 6.8% to 12% of non-taxable spending among Compt customers, marking it a key tool for attracting and retaining top talent.

In a tuition reimbursement benefit, a company sponsors some or all of the cost of new coursework, with the employee paying for their course upfront and then the employer paying back a portion or the full cost upon completion. 

According to IRS Guidelines, employers can offer each employee up to $5,250 of tax-free educational assistance each year. Anything over that is subject to income tax. 

Psst: Check out more tips and guidelines on how to create a successful employee tuition reimbursement program.

Employee Examples of Professional Development Claims

At Compt, we’ve seen that ‘professional development’ can mean a lot of different things, proving a one-size-fits-all experience with dated course libraries or limited options needs to be a thing of the past. 

Our report showed that employees chose to spend their professional development dollars at more than 2,500 vendors. Here are a few (OK, 10…) of our favorite examples from Compt customers: 

• Book titled – “Work Like a Boss: A Kick-in-the-Pants Guide to Finding (and Using) Your Power at Work”
• ‘2 online courses in UC Berkeley Extension Program’
• ‘A non-taxable $500 tuition deposit for an online graduate degree in media studies’
• ‘Student loan repayment’
• ‘Project management certification exam’
• ‘AI-powered writing assistant’ 
• ‘Career coaching’ 
• ‘Harvard Business Review subscription’
• ‘Productivity book “Smart Phone, Dumb Phone Free Yourself”’
• ‘Course on improv for therapists’

Here’s a look at the different types of categories a professional development account could encompass, based off of Compt customer utilization data: 

Unsurprisingly, while the categories vary, the claims showed a strong focus on AI-related professional development needs, with AI being mentioned hundreds of times across thousands of claims. 

How to Launch a Successful Professional Development Account

Putting a professional development account in place requires structure, processes, and guardrails so that both employees and employers understand what’s involved. 

From approval processes to reimbursement workflows, making sure your employees are aware of what’s available to them and that all administrative functions (which could be anyone from line managers to finance to HR!) have the proper permissions … there’s a lot to think about when it comes to putting in place a successful professional development account. 

Without the right structure in place, you’re at risk of employees making purchases without proper approval, over-taxing (or under-taxing) purchases, or missing an opportunity for employees to use a benefit (since they don’t even know it’s there!). 

But not to worry, we’re going to break it down for you. Here are the four core steps you’ll want to follow to set up a professional development account or stipend program: 

1. Identify your current number of employees and your total budget for professional development.
   
   The funding ranges for professional development among Compt customers varies from a minimum of $100 per employee, all the way up to $2,000, with our average customer funding $1,140 annually. Keep in mind that if your budget can’t accommodate, say, funding full tuition reimbursement, there are plenty of other ways to support your employees’ professional development.

There are three different types of budgeting we’ve seen in professional development stipends. Here’s a look at these approaches: 

• A case-by-case basis: There’s no set budget per employee or department, and requests are reviewed individually. This may make sense for smaller organizations that aren’t anticipating high takeup of this benefit. 
• Individual budgets: The employer sets a specific budget per employee and determines the timeline (monthly, quarterly, or annual). 
• A group or shared budget: Employers allocate funds by department, location, or team. For example, your engineering department may require a larger budget based on employee headcount vs. your HR department. Or if you have dispersed employees, you may need more budget for your larger offices versus smaller, satellite offices.

Professional Development Pro™ by Compt lets you take this one step further to allow for endless customization options where you can segment by country, department, or any other HRIS-defined attributes (manager level, etc.). 

2. Next, you’ll want to set your eligibility criteria. Who can take advantage of this new benefit? This might be different by location, department, seniority, length of employment, etc. 

For example, you might not want your professional development account to kick in until an employee has been with the company past a probationary period, or the amount in their professional development account may increase if they are a manager-level versus an individual contributor. 

3. Figure out workflows and processes for approvals, requests, and reimbursements. This part can be tricky, but luckily, Professional Development Pro does all the heavy lifting for you by keeping your workflows in check so your team never misses an approval request, and employees aren’t kept waiting for their reimbursements. 

You’ll want to define who approves your professional development requests, and how many layers you need. A sample workflow might look like something like this: 

• Manager receives a pre-approval request from their employees.
• A secondary approver (maybe HR or a department lead) approves the request based on budget. 
• Once approved, the employee submits a receipt for reimbursement. 
• Reimbursement is reviewed and approved (typically through finance or payroll).
• Employee is reimbursed. 

We’ve heard that this is where the bottlenecks occur most, which is why Compt Professional Development Pro keeps all of this in one, centralized place. No more endless email threads or missed communications (or unhappy employees!). 

4. The last step is to communicate your new benefit to your employees! 

This is the exciting part. Draft up an email, host a page on your internal wiki, or train up your managers to promote your new benefit in their one-on-ones.

Remember to explain the why, what, when and how details, so employees understand the value of the new benefit and how they can use it. 

If you’re a Compt customer, we’ll automatically send invites to your employees to announce the program with additional periodic reminders to keep usage steady.

Plus, we’ll provide you with talking points and information for your employees to make this process super simple. 

3 top tips to maximize your professional development usage

Here are a few other best practices to keep in mind, based on what we’re seeing our Compt customers put in place with their own professional development accounts:

Make it annual. 

Out of our customers who offer an exclusive professional development stipend, 60% of them offer one annually to their employees. This helps employees access funds when they’re needed year-round, which is perfect for annual subscriptions or one-off purchases. 

Offer choice. 

It’s important to recognize different learning styles as well as varying employee needs. Your management team will need different on-the-job skills than your frontline employees, yet each could benefit from extra support. So why not let them chart their own professional development journey? Find an option that provides maximum flexibility in funding so employees can tailor development to their own personal needs. 

Don’t be scared to start small. 

Extra support is better than no support. If your company can’t invest in tuition reimbursement, consider a smaller stipend to start with, like a $100 yearly account for books or productivity tool subscriptions. Books made up a quarter of all Compt customer professional development claims in 2024! 

Professional Development Pro™

The new way to deliver professional development accounts to your people

The old ways of delivering professional development just isn’t working anymore. Today’s employees (and their employers) deserve a better experience that’s easier for them to use and for their leaders to administer. That’s why we’re introducing Professional Development Pro to streamline requests, approvals, and budget tracking, eliminating complex workflows and empowering employees to grow and develop.

Our standard stipend program allows employers to offer stipends within the Professional Development category.

However, Professional Development Pro brings it up a level with key product enhancements unique to professional development programs, including:

Automated program management

One central hub that brings all of your requests, approvals, reimbursements, and budget tracking together to reduce stakeholder admin time.

Infinitely customizable budgets and approvals

Configure individual or shared budgets, set eligibility by role, location, or custom groups, and automate multi-level approvals to design robust and flexible programs.

Learning recommendations

Employees discover top resources used by peers in similar roles with verified reviews to maximize learning investments.

Real-time reporting

Track engagement, spot trends, and see the impact of your program with instantly available reporting.

Professional development accounts and stipends are proven to boost retention and attract top-tier candidates, while showing employees that at the end of the day, their company believes in their contributions and wants to help them excel. Isn’t it time to launch a professional development account that your people (and your HR team) will love?

At Compt, we want to make professional development more accessible, visible, and, most of all, easy to administer. Get in touch with us today to learn more about Professional Development Pro to build a tailored professional development benefit that’s right for you and your people. 

Frequently Asked Questions (FAQ) on Professional Development Accounts

Is a professional development account taxable? 

This depends. If these expenses qualify as work-related expenses, then they would fall under a working condition fringe benefit and would be deductible business expenses for the employer and tax-free for the employee. Or, if the employer offers an Educational Assistance Program for student loan repayments, then professional development benefits can be tax-free up to the IRS limit of $5,250 per employee. Professional development outside of these cases would generally be considered a taxable benefit. 

Is a professional development account considered a fringe benefit?

Yes, professional development accounts and stipends are considered a fringe benefit. Also known as a lifestyle benefit, these benefits can include wellness stipends, tuition assistance, childcare reimbursement, or employee discounts, to name just a few, which have specific tax allocations. (And yes, Compt helps you categorize these into taxable vs. non taxable to make compliance easy!).

Are professional development stipends reported on W-2? 

If the expenses do not qualify as exempt from employment tax (see taxable question above), then employers must report stipends on their employees’ form W-2 as taxable income, and they’ll also be required to withhold state and federal taxes accordingly. 

Who is eligible for a professional development account? 

Eligibility varies by employer, but typically this is limited to a full-time employee who has been with the company for at least a year. This also could depend on the benefit provided, for example, reimbursement for a professional development book is much different than needing to be reimbursed for long-term coursework. Companies can require different waiting periods or different approval needs. 

Please Note: Compt software supports the categorization and proper reporting of benefits according to IRS guidelines, helping businesses maintain compliance. However, Compt cannot provide tax advice, and users should consult their own tax, legal, and accounting advisors when necessary.