Moving Expenses Tax Deduction
Published on October 24, 2024
by Grace Lorraine Angeles
Grace Lorraine, an IRS Enrolled Agent and CPA with 14 years of expat tax experience, specializes in US tax preparation, tax planning, and tax advice for US citizens and Green Card holders living and working abroad.
Table of Contents
Can you deduct moving expenses on your US taxes?
If you’re wondering whether you can still deduct moving expenses, the answer is generally no, unless you’re in the military.
The 2017 Tax Cuts and Jobs Act (TCJA) removed the moving expense deduction for most taxpayers, and this change is in effect until 2025. This means that if you’re not an active-duty military member, moving expenses are not tax-deductible.
What did the Tax Cuts and Jobs Act change?
The TCJA introduced sweeping tax reforms, including removing the moving expense deduction for non-military taxpayers. It also lowered individual and corporate tax rates, doubled the standard deduction, and revised or eliminated many other deductions.
For most people, this law means that moving costs won’t reduce their taxable income unless they are part of the military.
Who still qualifies for the moving expenses deduction?
Only active-duty military members can still claim this deduction if they have to relocate due to a permanent change of station (PCS). For everyone else, the deduction is paused until 2026.
Before the TCJA, civilians could deduct moving expenses for work-related relocations if they met specific distance and time requirements, but those rules no longer apply.
Are there any state-specific rules for deducting moving costs?
Although federal law no longer allows moving expense deductions, some states continue to offer this tax break.
Each state has its own tax rules, so it’s possible that even if you’re not eligible at the federal level, you may still deduct these costs on your state tax return. However, this only applies in a few states.
Which states allow you to deduct moving expenses?
Certain states have decided to keep the deduction despite the federal changes. If you’re moving to or from one of the following states, check your state’s tax laws to see if you’re eligible to deduct moving expenses:
- Arizona
- California
- Massachusetts
- New Jersey
- New York
- Virginia
These states still allow deductions for moving costs, so it’s worth checking the specific requirements in your state.
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What moving expenses can be deducted for military personnel?
Active-duty military members moving due to a permanent change of station (PCS) can still claim deductions for certain moving expenses. These include:
- Moving household goods: You can deduct the cost of transporting your household items to your new location.
- Storage fees: The cost of storing your belongings for up to 30 days after the move is also deductible.
- Travel expenses: You can claim lodging expenses for yourself and your family while traveling to your new home, though meal costs during the trip are not deductible.
What expenses are not deductible?
Under the Tax Cuts and Jobs Act (TCJA), most taxpayers are no longer eligible for moving expense deductions. Common non-deductible items include:
- Meals: Costs for meals incurred during the move are not deductible.
- House-hunting trips: Travel to find a new home before your move is no longer a deductible expense.
- Temporary housing: Costs related to staying in temporary accommodation after the move are not deductible.
Can you still deduct moving expenses if you move abroad?
Yes, military members who are required to relocate overseas due to military orders can still deduct their moving expenses. The same rules apply to both domestic and international moves. Deductible expenses include transportation of goods and lodging costs, excluding meals.
How do I claim the moving expenses deduction?
Military members can claim moving expenses by filling out IRS Form 3903. Here’s a step-by-step process:
- Obtain Form 3903: This is the form used to report your moving expenses.
- Fill in personal details: Provide your name and Social Security number.
- List expenses:
- Line 1: Enter the cost of moving your goods.
- Line 2: Record any travel and lodging expenses (excluding meals) associated with your move.
- Calculate your deduction: The form helps you calculate the total deduction based on these expenses.
- Attach to your tax return: Submit Form 3903 with your Form 1040 when filing your taxes.
Can self-employed individuals still claim moving expenses?
No, self-employed individuals can no longer deduct moving expenses unless they qualify for the military exception. The Tax Cuts and Jobs Act suspended this deduction until at least 2026.
What happens if my employer reimburses my moving expenses?
If your employer reimburses your moving costs, those funds are now considered taxable income. Pre-2018, such reimbursements were non-taxable, but under the new law, they must be reported as part of your earnings.
The only exception to this rule is for active-duty military members whose employer reimbursements remain tax-free.
