What You Need to Know About the Moving Expense Tax Deduction
5 Min Read | Published: January 29, 2024
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The 2017 Tax Cuts and Jobs Act (TCJA) did away with moving expense deductions for most people, but there are still possible tax consequences you need to know.
At-A-Glance
- The federal tax deduction for moving expenses is gone – unless you’re in the military, or you moved before 2018.
- You might still have a state tax deduction, depending on where you live.
- Even if you don’t, your employer, your credit card, or smart spending strategies may help you save.
Until recently, relocating to start a new job or to seek work in another city was a little less costly thanks to the federal moving expense tax deduction. But the 2017 Tax Cuts and Jobs Act (TCJA) eliminated the moving expense deduction for most taxpayers.1 There is an exception for some active duty members of the Armed Forces,2 and certain states still permit the deduction on state income tax returns.3,4
Here’s what you need to know to figure out if you still qualify to deduct any moving expenses and how you can still save, even without a deduction.
Can I Still Deduct Moving Expenses on My Federal Tax Return?
The TCJA tax overhaul eliminated many specific deductions starting on January 1, 2018. One of these was the moving expense deduction – with one big exception: You still qualify if you’re an active-duty member of the military who is ordered to move to a new, permanent change of station.1
What If You Do Still Qualify for a Federal Moving Tax Deduction?
If you do still qualify for a federal moving expense deduction, here are some key things to know:
- What’s deductible: Only costs specifically related to your move are tax deductible, including packing, shipping, travel, interim lodging, storage unit, rental truck, supplies, and parking costs — but not meals you ate on the way, for example, or the costs of shopping for a new home.5
- Not if reimbursed: You can’t deduct expenses if the government reimbursed them or paid them directly.5
Move Savings on State Income Tax Returns
Some states automatically update their income tax rules to follow whatever the federal government does, others update their rules by legislation, and a few go their own way.3
Among states that have retained moving expense deductions, rules can vary. For example, New York and California still allow a moving expense deduction and exclude qualified employer moving expense reimbursements from income on your state return.6,7 It’s a good idea to check with your tax advisor or tax software to understand your state’s current rules, since they can change.
Ways Your Employer Can Help
For many taxpayers on the move, the federal tax overhaul is a double whammy: If your employer reimburses the cost of your move or offers you a relocation bonus, that’s now taxable income.8
Despite the additional costs, some employers have recognized that they need to go the extra mile to recruit or keep a valued employee. They’ve decided to compensate employees by “grossing up.”9,10 That means the employer tracks and reimburses your moving costs, and also pays the additional taxes resulting from their reimbursement. Larger companies may use specialist relocation management firms to help with the paperwork. If you’re being asked to move, it’s worth asking your employer to consider doing this.
If All Else Fails: Savings, Points, and Rebates
If you don’t qualify for tax savings and your employer won’t “gross up,” there are still many finance-savvy steps you can take. First, you can look for ways to cut your own moving costs.
- Do more yourself. Do more of your own packing, loading, and unloading if you can; use pros only for the tasks you can’t handle on your own.
- Time your move. Professional moving costs are sometimes lower at mid-month, mid-week, during fall or winter, or even early in the morning.11,12
- Comparison shop. Professional mover costs can vary widely – and don’t forget to check their reviews, Better Business Bureau (BBB) ratings, and insurance.12,13
- Get free boxes. Often, you can get free boxes from your local grocery, liquor store, retailer, or library.12,13
- Move less stuff. Donate or sell belongings you no longer really need. Many people end up moving stuff they’ll never use, and then pay for unnecessary storage at their destinations.12
For remaining moving expenses, consider using a credit card that offers you points or rebates. Some may even offer bonuses for moving-related spending – e.g., gas, airfare, and temporary lodging.14 Careful strategizing on the cards you use can meaningfully cut your costs, even if you can’t take a moving expense deduction.
And if that move is truly upon you, be sure to check out the related checklist article: “Moving out of State Checklist: 7 Tips for Cutting Costs.”
The Takeaway
Moving is expensive. Although the federal moving expense deduction has gone away, it’s important to use any state moving expense deductions you’re still eligible for, negotiate whatever employer benefits you can, and use proven strategies to cut your costs.
1 “Amendment of 1986 Code,” One Hundred Fifteenth Congress of the United States of America
2 “Moving Expenses to and from the United States,” IRS
3 “Toward a State of Conformity: State Tax Codes a Year After Federal Tax Reform,” Tax Foundation
4 “IRS Form 3903: Are Moving Expenses Tax Deductible?,” TurboTax
5 “Topic No. 455, Moving Expenses for Members of the Armed Forces,” IRS
6 “New York State Decouples from Certain Personal Income Tax Internal Revenue Code (IRC) Changes for 2018 and after,” New York State Department of Taxation and Finance
7 “Moving Expense Deduction,” State of California Franchise Tax Board
8 “Employer Update,” IRS
9 “Relocation Gross Up for Taxes [Complete 2023 Guide],” Arc Relocation
10 “Is My Relocation Package Taxable?,” Experian
11 “Moving on a Budget: 10 Tips to Move Cheaply,” Life Storage blog
12 “Tips to Save Money on Moving Expenses,” Take Charge America
13 “11 Ways to Move on a Budget,” Move.org
14 “What Is a Rewards Credit Card?,” Experian
Bill Camarda has more than 30 years’ experience writing about business, technology, and finance. He is author or co-author of 19 books on information technology.
All Credit Intel content is written by freelance authors and commissioned and paid for by American Express.
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The material made available for you on this website, Credit Intel, is for informational purposes only and intended for U.S. residents and is not intended to provide legal, tax or financial advice. If you have questions, please consult your own professional legal, tax and financial advisors.
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