Are employer-provided meals and lodging taxable?

Meals and lodging furnished by your employer

The Meals and Lodging section of Publication 525 sets two tests. Free meals are excluded when they are furnished on the business premises of your employer and furnished for the convenience of your employer. Free lodging must meet three tests: furnished on the business premises, furnished for the convenience of the employer, and a condition of employment, meaning you must accept it in order to properly perform your duties. The exclusion covers you and your family. Failing any test, the value of the meals or lodging is generally compensation. You also do not include meals or meal money that qualifies as a minimal fringe benefit, the subject of the De Minimis Benefits section.

Faculty lodging at schools and academic health centers

If you are an employee of an educational institution or an academic health center and your lodging does not meet the three tests, you may still avoid including its value, if the lodging is qualified campus lodging and you pay adequate rent. Qualified campus lodging is lodging furnished to you, your spouse or your dependents by or for the institution or center, for use as a home, located on or near a campus. An academic health center has as its principal purpose providing medical or hospital care or medical education or research, receives payments for graduate medical education under the Social Security Act, and has among its principal purposes providing and teaching basic and clinical medical science using its own faculty.

Adequate rent

Rent for the year is adequate if it is at least equal to the lesser of 5% of the appraised value of the lodging, or the average of rentals paid by individuals (other than employees or students) for comparable lodging held for rent by the institution. If you pay less than the lesser of these amounts, you include the difference in income. The lodging must be appraised by an independent appraiser and the appraisal must be reviewed annually.

Example 4 in the publication: a sociology professor rents a home from the university that is qualified campus lodging. It is appraised at $200,000, and comparable rent paid by non-employees and non-students averages $14,000 a year. The professor pays $11,000. Five percent of $200,000 is $10,000, which is less than $14,000, so adequate rent is $10,000 and the professor includes nothing. If the professor paid only $8,000, $2,000 ($10,000 minus $8,000) would be included. The calculator above reproduces this.

Other employer-provided benefits on the same page

The same part of Publication 525 covers other fringe benefits. Moving expense reimbursements are no longer excluded for nonmilitary taxpayers. No-additional-cost services, such as an airline ticket for an airline employee when a seat would be empty, are excluded if the employer offers the service to customers in the ordinary line of business where you work and has no substantial additional cost; Example 5 includes a flight attendant’s personal flights but not a hotel room, because the attendant does not work in the hotel business. Qualified transportation fringes (commuter vehicle, transit pass and qualified parking) are excluded up to $325 a month each for 2025. Working condition benefits, which would be deductible if you paid, are not income; Example 6 is an engineer’s trade magazine subscription.

When a benefit is included

If a fringe benefit is included in income, the amount is generally its value under the general valuation rule or special valuation rules. Under the general rule you include the amount by which FMV exceeds the sum of what you paid and any amount excluded by law. If you pay FMV for the benefit, nothing is included.

Worked example

A hospital requires a resident physician to live in an on-site residence so they can respond to emergencies, and provides it free. Because it is on the business premises, for the employer’s convenience and a condition of employment, its value is not income. A hospital that instead gives a nurse a free apartment two blocks away as a perk does not meet the tests; unless it is qualified campus lodging with adequate rent (which applies only to schools and academic health centers), the value is generally included in the nurse’s income. This page covers the Meals and Lodging section of Publication 525 (2025) and is not a substitute for the employer’s own payroll treatment.

Limits of this page

Business-expense rules for meals you pay for yourself are in Publication 463, not here. For related employee-benefit topics see are disability pensions taxable.

Related Publication 525 topics

More from the same IRS publication: Is disability pension taxable income?, Are accelerated death benefits taxable?, Is restricted stock taxable income?.

Sources

• IRS Publication 525, Taxable and Nontaxable Income (2025): the “Meals and Lodging” section and the sections it cross-references. Read November 2, 2026.

Edition read: Publication 525 (2025), for use in preparing 2025 returns. Dollar limits and dates in this publication are for 2025; check the current publication and form instructions for your tax year. This page summarizes the publication and does not replace it.