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According to the Bureau of Labor Statistics, the mean pay per year for a real estate agent in May 2024 was $70,970. However, agents can earn much more if they buy and sell properties in a high-income area with expensive real estate, such as New York or California, or if they build a highly successful business.

Here’s a look at what real estate agents do, the different types of agent jobs possible, how much they earn, and the factors affecting their salaries.

What Are Real Estate Agents and What Do They Do?

Real estate agents help buyers and sellers conduct transactions involving residential or commercial property. They usually work under a broker, who takes care of the management and branding of a real estate group. The real estate agent’s role is to find clients, help them search for properties, and then guide the price negotiations between the buyer and seller. In addition, they may help coordinate the legal transactions involved and prepare documentation.

Real estate agents are licensed professionals in the states where they work. The real estate agent is usually paid through commission, which is a percentage of the property’s sales price. How much commission they earn depends on the brokerage, the state, and property values. Some agents are licensed brokers, meaning they can work independently.

💡 Quick Tip: When you have questions about what you can and can’t afford, a spending tracker app can show you the answer. With no guilt trip or hourly fee.

The Different Types of Real Estate Agents

There are different types of real estate agents depending on their licenses and the types of property they work with. The main types of agents are Realtors®, brokers, listing agents, buyer’s agents, commercial agents, and residential agents.

Realtor®

A Realtor® is a licensed real estate agent who is a member of the National Association of Realtors® (NAR), which requires them to adhere to a code of ethics.

Broker

Brokers are licensed as such and tend to earn higher salaries and have more freedom in their career choices. They do not necessarily need to be tied to a larger brokerage firm.

Listing Agent

Listing agents are called “seller’s agents” because they represent the seller in a real estate transaction. These agents find buyers for property and try to sell a property at the highest price possible for the seller.

Buyer’s Agent

The buyer’s agent represents the buyer in a real estate transaction. They will try to find the right property for the buyer and negotiate the lowest possible price.

Commercial Agent

A commercial real estate agent primarily sells, rents, or buys commercial real estate, such as retail space, warehouses, office buildings, and industrial and mixed-use space. These agents typically know the local commercial real estate market well and might be involved in property management.

Residential Agent

A residential real estate agent primarily buys and sells homes, condos, and units in apartment complexes. They need a good grasp of the local residential real estate market, the amenities an area offers, and what type of home best suits their clients.

It’s worth noting that being a real estate agent can be a good job for a “people person” compared to a job for introverts. An agent will often have to discern a buyer’s or seller’s needs, draw them out, and spend a lot of time hand-holding clients through the ups and downs of their real estate deal.

Recommended: Which Trade Makes the Most Money?

How Much Do Starting Real Estate Agents Make?

The entry-level salary for real estate agents reported by different sources varies. According to US Realty Training, during the first year, real estate agents can expect to make between $30,000 and $50,000.

The amount depends, of course, on many variables, not least of which is how hard the agent works and how many hours they devote to their real estate profession. The area where they work and the kinds of properties they sell will also make a difference, especially when earning commission.

Starting salaries for agents may typically be low, but according to McKissock Learning, a group that provides learning solutions for licensed real estate professionals,after three years in the field, the income of a real estate agent could triple from the first year. The longer you work as an agent and develop a clientele, the higher your salary might be.

Also, consider the cost of living and housing prices where a real estate agent works. Real estate agents typically earn money via commission (say, 5% of the property’s sale price, which may be divided between a couple of agents, such as the listing agent and the buyer’s agent). This can make a tremendous difference: One real estate agent might be selling homes in the range of $300k, while another might sell multi-million dollar waterfront homes in Hawaii. The latter will likely earn much more competitive pay.

What Is the Average Salary for a Real Estate Agent?

How much does a real estate agent make a year? According to the Bureau of Labor Statistics, the mean yearly salary for a real estate agent in May 2024 was $70,970, while real estate brokers earned a mean annual salary of $91,660. Salaries will vary depending on where an agent works (the state), their licenses, and how hard they work.

How much does a real estate agent make per sale? This factor is critical in determining their income. An agent who works in New York City, prime areas of Los Angeles or Palo Alto, or Hawaii will likely earn a higher net commission per sale because average property prices in those areas are high. (For the very high-end professionals, being a real estate agent could be among the highest paid jobs per state.) Because agents earn more the more properties they sell, how much time they spend on their business can also be a major factor affecting their earnings.

The table below shows the average real estate agent salary as of May 2024 (the most recent year available) based on data from the Bureau of Labor Statistics.

Real Estate Agent Job Considerations for Pay and Benefits

There are, as you might guess, an array of factors that contribute to a real estate agent’s pay and career opportunities. Consider the following points.

The Cost of Becoming Licensed

Pre-licensing real estate classes may cost around $150 to $700. These classes are necessary to prepare for the real estate exam, which, with related fees, may also add up to a few hundred dollars.

An established agent may also have to pay brokerage fees. The broker may take a commission on an agent’s real estate earnings or charge a monthly fee.

Marketing Costs

A realtor must likely market their services, and a common rule of thumb for what to spend on those costs is around 10% of commission income. It could also cost more at the outset as the agent builds their brand and presence in the area they intend to work in. Or, as a real estate agent builds their client base, they might upgrade and begin to invest more in videos and social media to boost their profile.

Initially, an agent may do better working under a brokerage. A brokerage already has a customer base to draw from and an established brand name that will help its agents’ reputations. A brokerage will expect some payment in return, but it could be a valuable partnership.

Economic Conditions

The real estate market is infamous for its volatility. In a “hot” market, properties can sell quickly at high prices (often elevated by bidding wars), and estate agents can earn high commissions.

However, in times of recession, homes sit on the market longer, prices can slump, and real estate agents may earn much less.

Because most people buy a home using a mortgage loan, interest rates heavily influence the market. High interest rates deter people from borrowing and slow down the real estate market.

Recommended: Is $100,000 a Good Salary?

Pros and Cons of Making a Living as a Real Estate Agent

A real estate agent is often an entrepreneur. That means they are in control of their business, but how much they earn depends on how much time they put in, their expertise and creativity, and other factors.

Here are some advantages and disadvantages of making a living as a real estate agent.

The Takeaway

The typical real estate agent’s salary averages $70,970, according to data from the Bureau of Labor Statistics. However, that figure can vary greatly depending on where an agent works, their skill, and how hot the market is. Agents in major cities and who specialize in luxury properties can do very well.

When working as a real estate agent, it’s important to balance such concerns as marketing, building your client base, and adjusting to fluctuating economic conditions. These and other factors can impact cash flow, for better or for worse.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

See exactly how your money comes and goes at a glance.

FAQ

How can you make $100,000 your first year in real estate?

It’s possible to make $100,000 a year in real estate or put together enough deals to take in that amount of income. Factors that will help include working in an area where house prices are high, setting a strategy, and marketing your services well to generate leads.

How much do Realtors® make in California?

The mean salary per year for real estate agents in California as of May 2024 was $76,220, according to the Bureau of Labor Statistics, compared to the national mean of $70,970. Realtors in California may earn more than the national average because property prices are often high, which leads to higher commissions on sales.

How much money does a real estate agent make a year?

How much a real estate agent earns in a year will depend on where and how they are licensed, the number of clients they represent, and the property prices in their area. According to the Bureau of Labor Statistics, the mean salary for a real estate agent in May 2024 was around $70,970, while real estate brokers earned a mean salary of $91,660.

Photo credit: iStock/Pekic

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SORL-Q425-017

If you’re exploring career options, pharmacy might have popped up on your radar — and for good reason. Not only can pharmacists command a good salary, they also have job security, as the pharmaceutical industry is one that won’t vanish any time soon.

That said, how much does a pharmacist make? Is it worth all the trouble of going through pharmacy school to become one? Let’s find out.

What Are Pharmacists?

You’ve likely picked up a prescription or two at a pharmacy, but maybe you didn’t give any thought to the person behind the counter. This individual is your local pharmacist, and it’s their job to prepare and dispense prescription medications.

Pharmacist Job Responsibility Examples

In addition to doling out prescription drugs, pharmacists also consult with patients, provide instructions for how to take medications, and help patients find low-cost medications. Some also give health screenings and immunizations.

Keep in mind, a pharmacist often needs to be outgoing, since their work involves speaking with patients throughout the day. If that’s not your personality, you may want to look into jobs for introverts.

💡 Quick Tip: We love a good spreadsheet, but not everyone feels the same. An online budget planner can give you the same insight into your budgeting and spending at a glance, without the extra effort.

How Much Is a Starting Pharmacist Salary?

As with most professions, pharmacists tend to earn more money as they gain more experience. But what is a good entry-level salary for pharmacists?

An entry-level pharmacist generally earns, on average, about $61 per hour. That’s $126,701 per year.

Of course, how much you can actually earn depends on where you live, what your duties are, and whether you work for an independent pharmacy or a chain. It can also help to research the highest-paying jobs by state.

Recommended: Is a $100,000 Salary Good?

What Is the Average Salary for a Pharmacist?

Now that you’ve seen what starting salaries are for pharmacists, let’s address the next question: How much money does a more experienced pharmacist make?

Generally speaking, pharmacists are usually paid by the hour. As of 2024, the mean wage for a pharmacist in the US is $65.97 per hour, according to the Bureau of Labor Statistics. That adds up to $137,210 per year.

What Is the Average Pharmacist Salary by State for 2024?

The amount you make will depend on where you live, among other factors. Here’s a look at the mean annual pharmacist salaries by state, according to May 2024 data from the Bureau of Labor Statistics.

Recommended: Pros and Cons of Raising the Minimum Wage

Pharmacist Job Considerations for Pay & Benefits

Where you live is one factor that can determine how much you earn as a pharmacist. Your on-the-job responsibilities may also play a role. For example, there are different job titles, and each has its own set of responsibilities, requirements, and salary ranges. Examples include:

•  Staff pharmacist

•  Pharmacy specialist

•  Clinical pharmacist

•  Pharmacy manager

•  Director of pharmacy

Some pharmacists may have roles and responsibilities beyond filling prescriptions, such as offering immunizations and health screenings. Some may be in charge of hiring and managing other employees. Some may work in traditional pharmacies, while others may work for companies focusing on chemotherapy, nuclear pharmacy, or long-term care.

Recommended: 25 High-Paying Trade Jobs in Demand

Pros and Cons of Pharmacist Salary

While being a pharmacist can be a rewarding job, there are potential drawbacks to keep in mind. Let’s look at some pros and cons.

Pros of Being a Pharmacist

Naturally, the competitive pay pharmacists often earn may be one reason to consider this career path. Because many pharmacists get paid by the hour, they’ll be compensated fairly for their time even if they work more than 40 hours a week.

Another perk is that you may have a flexible schedule that allows you to work part-time or during certain hours. There could even be opportunities to work remotely, which may be useful if you’re working in a rural area.

You might also be able to open your own pharmacy instead of working for someone else. This brings freedom and flexibility to you as a business owner.

Finally, you’ll be a valuable member of your community, since it’s your job to help people on their path to wellness.

Cons of Becoming a Pharmacist

If becoming a pharmacist was easy, everyone would do it! For starters, you’ll need to have about six years of education after high school. And the cost of pharmacy school can range anywhere from $34,000 to $43,000 a year for an in-state public college, or up to $92,000 a year for a private school.

Depending on your financial situation, this could require you to tap into savings or take out student loans. (Creating a budget while you’re in school or just starting out can help you keep track of where your money is going. A money tracker app can help make the job easier.)

Another possible drawback? Some pharmacies may not guarantee a certain number of hours a week, and in that case, being paid hourly may not come with the big paycheck you’d expect.

Also keep in mind that on the other hand, some pharmacists work long hours, which can have a negative impact on your health and mental wellbeing.

💡 Quick Tip: Income, expenses, and life circumstances can change. Consider reviewing your budget a few times a year and making any adjustments if needed.

The Takeaway

If you’re looking for a rewarding and potentially lucrative job, becoming a pharmacist might fit the bill. You’ll help your local community get healthier, and depending on where you live and your level of experience, you could earn a good salary, too.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

With SoFi, you can keep tabs on how your money comes and goes.

FAQ

What is the highest pharmacist salary?

The state where pharmacists tend to earn the most is California. The mean annual income of a pharmacist there is $162,110.

Is it hard to be hired as a pharmacist?

Becoming a pharmacist requires six years of education after high school. The workload is challenging, and pharmacies looking to hire generally have high expectations of applicants.

What is a pharmacist’s salary in NY?

The mean annual salary for a pharmacist in New York is $136,020, according to the Bureau of Labor Statistics. However, salaries can vary considerably by region, experience, and level of responsibility.

Photo credit: iStock/ADragan

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SORL-Q425-009

Whether you’re purchasing a new pair of eyeglasses, stocking up on over-the-counter medications, or paying for your child’s daycare, there may be certain expenses your health insurance plan doesn’t cover.

In those cases, having a flexible spending account, or FSA, could help you save money. This special savings account lets you set aside pretax dollars to pay for eligible out-of-pocket healthcare expenses, which in turn can lower your taxable income.

Let’s take a look at how these accounts work.

What Is an FSA?

An FSA is an employer-sponsored savings account you can use to pay for certain health care and dependent costs. It’s commonly included as part of a benefits package, so if you purchased a plan on the Health Insurance Marketplace, or have Medicaid or Medicare, you may no longer qualify for a FSA.

There are three types of FSA accounts:

•   Health care FSAs, which can be used to pay for eligible medical and dental expenses.

•   Dependent care FSAs, which can be used to pay for eligible child and adult care expenses, such as preschool, summer camp, and home health care.

•   Limited expense health care FSA, which can be used to pay for dental and vision expenses. This type of account is available to those who have a high-deductible health plan with a health savings account.

How Do You Fund an FSA?

If you opt into an FSA, you’ll need to decide on how much to regularly contribute throughout the year. Those contribution amounts will be automatically deducted from your paychecks and placed into the account. Whatever money you put into an FSA isn’t taxed, which means you can keep more of what you earn.

Your employer may also throw some money into your FSA account, but they are under no legal obligation to do so.

You can use your FSA throughout the year to either reimburse yourself or to help pay for eligible expenses for you, your spouse, and your dependents (more on that in a minute). Typically, you’ll be required to submit a claim through your employer and include proof of the expense (usually a receipt), along with a statement that says that your regular health insurance does not cover that cost.

Some employers offer an FSA debit card or checkbook, which you can use to pay for qualifying medical purchases without having to file a reimbursement claim through your employer.


💡 Quick Tip: When you have questions about what you can and can’t afford, a spending tracker app can show you the answer. With no guilt trip or hourly fee.

What Items Qualify for FSA Reimbursement?

The IRS decides which expenses qualify for FSA reimbursement, and the list is extensive. Here’s a look at some of what’s included — you can see the full list on the IRS’ website.

•   Health plan co-payments and deductibles (but not insurance premiums)

•   Prescription eyeglasses or contact lenses

•   Dental and vision expenses

•   Prescription medications

•   Over-the-counter medicines

•   First aid supplies

•   Menstrual care items

•   Birth control

•   Sunscreen

•   Home health care items, like thermometers, crutches, and medical alert devices

•   Medical diagnostic products, like cholesterol monitors, home EKG devices, and home blood pressure monitors

•   Home health care

•   Day care

•   Summer camp

Are There Any FSA Limits?

For 2025, health care FSA and limited health care FSA contributions are limited to $3,300 per year, per employer. Your spouse can also contribute $3,300 to their FSA account, as well.

Meanwhile, dependent care FSA contributions will be increased to $7,500 per household, or $3,750 if you’re married and filing separately, on January 1, 2026.

Does an FSA Roll Over Each Year?

In general, you’ll need to use the money in an FSA within a plan year. Any unspent money will be lost. However, the IRS has changed the use-it-or-lose-it rule to allow a little more flexibility.

Now, your employer may be able to offer you a couple of options to use up any unspent money in an FSA:

•   A “grace period” of no more than 2½ extra months to spend whatever is left in your account

•   Rolling over up to $660 from 2025 to use in the 2026 plan.

Note that your employer may be able to offer one of these options, but not both.

One way to avoid scrambling to spend down your FSA before the end of the year or the grace period is to plan ahead. Calculate all deductibles, copayments, coinsurance, prescription drugs, and other possible costs for the coming year, and only contribute what you think you’ll actually need.

Recommended: Flexible Spending Accounts: Rules, Regulations, and Uses

How Can You Use Up Your FSA?

You can consider some of these strategies to get the most out of your FSA:

•   Buy non-prescription items. Certain items are FSA-eligible without needing a prescription (but save your receipt for the paperwork!). These items may include first-aid kits, bandages, thermometers, blood pressure monitors, ice packs, and heating pads.

•   Get your glasses (or contacts). You may be able to use your FSA to cover the cost of prescription eyeglasses, contact lenses, and sunglasses as well as reading glasses. Contact lens solution and eye drops may also be covered.

•   Keep family planning in mind. FSA-eligible items can include condoms, pregnancy tests, baby monitors, and fertility kits. If you have a prescription for them, female contraceptives may also be covered.

•   Don’t forget your dentist. Unfortunately, toothpaste and cosmetic procedures are not covered by your FSA, but dental checkups and associated costs might be. These could include copays, deductibles, cleanings, fillings, X-rays, and even braces. Mouthguards and cleaning solutions for your retainers and dentures may be FSA-eligible as well.


💡 Quick Tip: Income, expenses, and life circumstances can change. Consider reviewing your budget a few times a year and making any adjustments if needed.

Flexible Savings Account (FSA) vs. Health Savings Account (HSA)

When it comes to managing healthcare costs, another popular option is a health savings account (HSA). Both FSAs and HSAs offer tax advantages, but they differ in terms of eligibility, contribution limits, and how the funds can be used.

Both types of accounts:

•   Offer some tax advantages

•   Can be used to pay for co-payments, deductibles, and eligible medical expenses

•   Can be funded through employee-payroll deductions, employer contributions, or individual deductions

•   Have a maximum contribution amount. In 2025, people with individual coverage can contribute up to $4,300 per year, while those with family coverage can set aside up to $8,550 per year.

That said, there are some key differences between HSAs and FSAs:

•   You must be enrolled in a high deductible health plan in order to qualify for an HSA.

•   HSAs do not have a use-it-or-lose-it rule. Once you put money in the account, it’s yours.

•   If you quit or are fired from your job, your HSA can go with you. This happens even if your employer contributed money to the account.

•   If you’re 55 or older, you can contribute an additional $1,000 to your HSA as a catch-up contribution — similar to the catch-up contributions allowed with an IRA.

•   If you withdraw money from your HSA for a non-qualified expense before the age of 65, you’ll pay taxes on it plus a 20% penalty.

•   If you withdraw money from your HSA for any type of expense after age 65, you don’t pay a penalty. However, the withdrawal will be taxed like regular income.

Recommended: Benefits of Health Savings Accounts

The Takeaway

Flexible spending accounts are offered by employers and can be a useful tool for paying for health care or dependent-related expenses. Notably, you fund the account with pretax dollars taken from your paycheck, which can lower your taxable income and help you save money.

You typically need to spend your FSA money within a plan year, though your employer may give you the option to either roll over a portion of the balance into the next year or use it during a grace period. There are also guidelines around what you can spend the FSA funds on and how much you can contribute to your account.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

See exactly how your money comes and goes at a glance.

FAQ

How does a flexible spending account work?

A flexible spending account (FSA) lets you set aside pretax money from your paycheck to cover eligible medical, dental, vision, or dependent care expenses. Because contributions reduce your taxable income, you save on taxes.

What is the difference between an FSA and an HSA?

The main difference between an FSA and an HSA is ownership and eligibility. FSAs are employer-owned and require you to spend funds within the plan year, while HSAs are individually owned, available only with high-deductible health plans, and allow funds to roll over and grow tax-free year after year.

Can I withdraw money from my flexible spending account?

Yes, you can withdraw money from your flexible spending account (FSA) to pay for eligible medical expenses such as copays, prescriptions, and medical supplies. However, withdrawals must be for qualified expenses.

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

SORL-Q425-005

Fringe benefits are additional forms of compensation provided to employees beyond their regular wages or salary. They can include health insurance, retirement plans, paid time off, bonuses, tuition assistance, and other perks that enhance overall compensation and help attract, retain, and motivate employees within an organization.

Here’s a look at some examples of fringe benefits, how they work, and whether they’re taxable.

What Are Fringe Benefits?

Typically, employers compensate their employees with a traditional paycheck and some additional benefits that they must provide, such as workers’ compensation coverage or unemployment.

But in an effort to keep workers happy, loyal, and motivated — and to attract new talent — many organizations also offer fringe benefits such as health insurance, childcare assistance, and employee stock options. These extras are above and beyond a regular paycheck and are often included in a hiring package.

💡 Quick Tip: We love a good spreadsheet, but not everyone feels the same. An online budget planner can give you the same insight into your budgeting and spending at a glance, without the extra effort.

Common Fringe Benefits

Here’s a look at some common fringe benefits:

•  Accident and health benefits: Provides help with health-related costs not covered by your traditional insurance plan.

•  Athletic facilities: Provides access to on- and off-site athletic and gym facilities.

•  Dependent care assistance: Helps you pay for some care-related expenses for qualifying dependents, including children, a disabled spouse, or legally dependent parents.

•  Adoption assistance: Provides payment and reimbursement for expenses related to adopting a child.

•  Employee stock options: Gives employees the chance to buy a certain amount of company stock at a specified price and by a certain time.

•  Group-term life insurance coverage: Allows employers to provide their employees with up to $50,000 in tax-free insurance. Coverage is traditionally 1-2x salary, where the first $50,000 is received tax-free, then any additional coverage is taxed.

•  Health savings accounts (HSAs): Provides tax-advantaged savings accounts for employees enrolled in high-deductible health plans. These accounts may receive contributions by the employer or simply be funded on a pre-tax basis by the employee to help them pay for dental and health care costs.

•  Transportation and commuting benefits: Helps employees get to and from work, such as through the use of a company vehicle. Employees may also be able to have qualified transportation costs taken from their pre-tax pay, which reduces their taxable income.

•  Tuition reduction: Allows employers to chip in for the cost of tuition to educate an employee and sometimes their spouse or children.

•  Meals: Provides employees with free on-site food and snacks.

For a more complete list of fringe benefits, check out IRS Publication 15-B .

Are Fringe Benefits Taxable?

Generally speaking, most fringe benefits are subject to employment taxes. The taxes are taken out of your paycheck and reported on your annual tax return. (If you’re a contractor, you’ll typically report fringe benefits on a Form 1099-MISC. If you’re a non-employee, fringe benefits are not subject to employment tax.)

That said, the IRS does consider some fringe benefits nontaxable. This means they’re not subject to federal income tax withholding, Social Security, Medicare, or federal unemployment tax, nor must they be reported on your tax return. Often, in order for a fringe benefit to avoid being taxed, certain qualifications must be met.

Here are some extra perks that are considered nontaxable (the full list is available on the IRS’ site):

•   Retirement planning services

•   Adoption assistance

•   Meals and snacks (If certain conditions are met)

•   Health insurance (up to a certain dollar amount)

•   Group-term life insurance (up to a certain amount of coverage)

•   Commuting or transportation benefits

•   Dependent care assistance (up to a certain amount)

•   Awards given for achievements

Tax-Advantaged Fringe Benefits

Some fringe benefits allow employees to direct a certain amount of funds pretax toward qualified accounts and expenses, which can lower their taxable income.

These tax-advantaged benefits are (somewhat oddly) known as “cafeteria plans,” because they allow employees to select the benefits they want. You must be permitted to choose from at least one taxable benefit, like cash, and one qualified benefit. Examples of qualified benefits include:

•  401(k) plans

•  Accident and health benefits, excluding Archer medical savings accounts and long-term care insurance

•  Adoption assistance

•  Dependent care assistance

•  Group-term life insurance coverage

•  HSAs (distributions from HSAs can be used to purchase long-term care coverage)

There are, predictably, a few more nuanced rules about cafeteria plans and employee tax treatment. While most regular employees receive normal tax treatment, other employees or contractors may not be treated as such for cafeteria plans.

If you have tax-related questions about fringe benefits, it might be a good idea to consult your attorney or preferred tax specialist.


💡 Quick Tip: Income, expenses, and life circumstances can change. Consider reviewing your budget a few times a year and making any adjustments if needed.

Planning Around Fringe Benefits

Employers typically offer fringe benefits to make the work environment better for the people who currently work there and more desirable for prospective employees.

Some benefits may hold a lot of appeal, such as 401(k)s, but others may be less appealing. For instance, you may decide you don’t want to use FSAs, which often restrict how much you can contribute and when you have to spend the funds.

It’s common to choose which fringe benefits you want when you’re starting a new job and filling out your initial paperwork. However, many companies will allow you to go back and make changes if you decide later that some choices aren’t right for you.

The Takeaway

Fringe benefits can run the gamut from use of the company car to adoption assistance to employee stock options. These extra perks are in addition to your paycheck and can be a powerful way to keep workers happy and loyal while also attracting new talent.

Generally speaking, most fringe benefits are taxable, though some — like retirement planning assistance, athletic facilities, and on-site meals and snacks — are not. Some fringe benefits will even allow you to direct a portion of funds pretax toward qualified accounts and expenses, which can help lower your taxable income.

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See exactly how your money comes and goes at a glance.

FAQ

What is considered an employee fringe benefit?

Employee fringe benefits are non-wage perks or compensation provided by employers in addition to regular pay. Common examples include health insurance, retirement plan contributions, paid vacation, bonuses, tuition reimbursement, childcare assistance, and employee discounts.

What’s the difference between salary and fringe benefits?

Salary is the fixed cash compensation an employee earns for their work. Fringe benefits, on the other hand, are non-cash perks provided in addition to salary — such as health insurance, retirement contributions, or paid leave.

Is PTO considered a fringe benefit?

Yes, paid time off (PTO) is considered a fringe benefit because it provides employees with compensation while they’re not working. PTO typically includes vacation days, sick leave, and personal days, and is offered in addition to an employee’s regular salary as part of their overall benefits package.

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While medical doctors have high earning potential, the first few years of a doctor’s career — known as residency — tend to be defined by long hours and relatively low pay.

So if you’ve got a medical career ahead of you — and medical school student loans to pay off — what sort of financial life can you expect? In this article, we’ll explore the average pay for medical residents and what they can do to manage their finances during this time.

How Much Do Medical Residents Make?

So, how much do doctors make during residency? According to the Association of American Medical Colleges, the average medical resident salary was $66,712 as of July 2024. Before taxes, that’s roughly $5,560 per month.

Medical residents are known to work very long hours. The Accreditation Council for Graduate Medical Education requires hospitals to ensure that residents work no more than 80 hours a week. If you do the math, an annual salary of $66,712 breaks down to $16-$17 an hour if a resident puts in a full 80 hours a week.

Making that money stretch can be a challenge — especially in high cost-of-living areas. To help, here are six tips for getting by (and even thriving) while living on an average resident salary.

💡 Quick Tip: Get flexible terms and competitive rates when you refinance your student loan with SoFi.

How to Get by on a Medical Resident’s Salary

1. Make a Simple Budget

The average resident has little time to keep track of their expenses, but building a simple budget could be the difference between making it work and ending up short. Your first step should be to make a list of all “necessary” spending, such as rent, utilities, transportation, and food.

Next you’ll want to look how much you bring home each month, including your resident’s salary and any additional income from your partner or family support. Then look at how much money you have left over. That’s how much you have to spend on “extras” each month, like dining out, travel, or clothing. You might decide to set spending limits for each category (for example, $100 for eating out) or monitor your spending as the month progresses. Or, you can do both.

2. Consider Personal Preferences and Trade-Offs

A budget can feel like a hassle, but if you set it up right, it can also be freeing. By knowing exactly how much you can spend, you can then decide what’s important for you to prioritize and what you don’t mind cutting out.

Maybe you’ll decide that you want to cut cable, but you don’t want to stop meeting up with friends at your local wine bar. Or perhaps you’ll give up eating out so you can spend more on rent. Making a budget is just analyzing each trade-off. Ask yourself, “Do I want this, or something else?”

3. Focus on Fixed Costs

One substantial way you can make an impact on your budget is by making “big wins” on fixed costs, such as housing, car payments, or utilities. For example, lowering a bill by $20 each month is going to have a bigger effect than saving a few dollars on small purchases. Looking at your own fixed spending, where could you ask for better rates or cut back entirely?

While you’re at it, look at your subscription services and other memberships. Though not often considered a “fixed cost,” they can add up quickly to become a significant expense. When you put them on autopay, it’s easy to forget about them and miss the chance to cancel them each month or year. Take time to go through your credit card statement to make sure you’re not paying for a service that you’re not able to use because you’re so busy.

4. Share a Living Space

When you’re trying to save money, there’s usually no financial win that’s bigger than saving on your housing costs. To do this, you can move into a more affordable place, live with roommates, or rent out a room in your place. Not only can a roommate help you save on rent, but also on utilities like water, electric, and cable.

Some folks don’t like the idea of having roommates because they lose some privacy. But if you’re a busy resident who’s not home very much and is trying to eke by on a small salary, it can be a great way to save money.

5. Choose Less Expensive Transportation

Transportation may be your second biggest expense after housing, especially if you have a car payment. But even if you’ve already paid off the vehicle, you’ll need to cover the cost of car insurance, as well as maintenance and sometimes parking. It can add up.

If you’re living in an area with good public transportation or you’re able to live within walking distance of the hospital, you might want to get rid of your car to save money. In some areas, Uber or Lyft offer a flat-rate, monthly pass option that can be less expensive than owning and maintaining a car.

If you’re not ready to sell your car quite yet, simply try using it less. Even this small act may save you money each month. For example, if you’re spending $120 per month on gas but could ride public transportation for $30 per month, you may save over $1,000 on transportation in a year.

6. Cook at Home

While it may be unreasonable to think that a medical resident will cook every meal, it may be worth taking a few hours each week to make a batch of meals that you can eat throughout the week. Preparing meals and eating at home could potentially save residents hundreds of dollars a month.

Another Option: Refinance Medical School Loans

Like most people who attended medical school, there’s a very likely chance you took out student loans. Managing these loans while you’re living on an average resident salary may be important for your financial success.

It is important to understand your medical school loan repayment strategies. One of the first decisions you may want to make is whether you want your loans to go into forbearance or to make payments on your loans during residency.

Student loan forbearance may seem like an ideal option for a person on a medical resident salary, but that might not always be the case. Federal medical school student loans accrue interest during that time, and that interest is added to your balance at the end of your forbearance period. This is called compounding, or capitalization, and means that you’re paying interest on top of interest.

You may want to consider refinancing your medical resident student loans. Refinancing is the process of paying off one loan (or many loans) with another, generally to lower your overall interest rate or to change the terms of your loan.

Refinancing student loans won’t be for everyone, as you will lose access to federal loan programs such as Public Service Loan Forgiveness (PSLF) and income-driven repayment plans.

Refinancing student loans won’t be for everyone, as you will lose access to federal loan programs such as Public Service Loan Forgiveness (PSLF) and income-driven repayment plans.

💡 Quick Tip: When refinancing a student loan, you may shorten or extend the loan term. Shortening your loan term may result in higher monthly payments but significantly less total interest paid. A longer loan term typically results in lower monthly payments but more total interest paid.

The Takeaway

Despite the relatively low pay compared to fully licensed physicians, residency is an important phase that offers invaluable training and experience. It’s important for residents to manage their finances wisely, considering the long-term benefits of their education and the potential for higher earnings in the future.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

FAQ

What is the average salary for medical residents in the United States?

The average salary for medical residents in the United States typically ranges from $50,000 to $70,000 per year, depending on factors such as the year of residency, specialty, and location.

How does the salary of a medical resident compare to that of a fully licensed physician?

Medical residents generally earn significantly less than fully licensed physicians. For example, while a resident might make between $50,000 and $70,000 annually, a practicing physician can earn anywhere from $150,000 to over $400,000 per year, depending on their specialty and experience.

What factors can influence the salary of a medical resident?

Several factors can influence a medical resident’s salary, including the year of residency (PGY-1 to PGY-4), the specialty they are pursuing, the geographic location of the hospital or institution, and the specific hospital or program they are affiliated with.

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