Hi everyone! I’m Bette Hochberger, CPA, CGMA. Moving for a new job can be exciting, but it often comes with significant expenses. At our firm, we understand that many people wonder about the tax implications of these costs.
If you’re considering a relocation for work, tax deductions might be on your mind. This post will explore the current rules and help you understand what expenses you may be able to claim on your taxes.
What Are Work-Related Moving Expenses?
Definition and Scope
Work-related moving expenses encompass the costs associated with relocating for a new job or transferring to a different location for your current employer. These expenses typically include the transportation of household goods, travel to the new home, and temporary storage fees.
Tax Law Changes and Moving Expenses
The Tax Cuts and Jobs Act of 2017 brought significant changes to the tax treatment of moving expenses. Under TCJA, employers must include moving expense reimbursements in employees’ wages, subject to income and employment taxes.
Current Eligibility for Moving Expense Deductions
As of 2025, only active-duty members of the U.S. Armed Forces can claim moving expense deductions on their federal tax returns. If you’re a member of the Armed Forces on active duty, you may be eligible to deduct moving expenses if your move was due to a military order and permanent change of station.
State-Level Considerations
While federal deductions are limited, some states still allow moving expense deductions on state tax returns. For example, California and New York (as of 2025) continue to offer this deduction for eligible taxpayers. It’s important to check your state’s specific tax laws or consult with a tax professional to understand your options.
Employer Reimbursements and Tax Implications
If your employer reimburses you for moving expenses, this amount is generally considered taxable income. You’ll need to report it on your W-2 form and pay applicable taxes. Some employers offer a “tax gross-up” to cover the additional tax burden, but this practice varies widely among companies.
We recommend keeping detailed records of all moving expenses, even if you’re not currently eligible for deductions. Tax laws can change, and comprehensive documentation will prove valuable if deductions become available again or if you need to report reimbursements accurately.
Now that we’ve covered the basics of work-related moving expenses and their tax implications, let’s explore which specific expenses might be deductible for those who qualify.
What Expenses Can Qualify for Deductions?
Transportation of Household Goods
For active-duty military personnel who qualify for moving expense deductions, the cost of transporting household items and personal effects often represents the largest deductible expense. This includes packing, crating, and moving your belongings. The IRS sets a standard mileage rate for moving-related transportation expenses (21 cents per mile for military moving). This rate changes annually, so it’s important to check the current rate when you prepare your taxes.
Travel to Your New Home
Expenses for traveling to your new home qualify for deductions. This includes lodging costs during the trip (but not meals). If you drive to your new location, you can deduct actual expenses like gas and oil or use the standard mileage rate. Airfare also qualifies as a deductible expense if you choose to fly.
Temporary Storage Fees
The IRS allows deductions for storage fees under specific conditions. You can deduct these costs for up to 30 consecutive days after your belongings leave your former home and before they arrive at your new home. This provision helps those who need short-term storage during their transition.
Record-Keeping for Moving Expenses
Detailed records of all expenses prove invaluable for tax purposes. Keep all receipts, bills, and credit card statements related to your move. This documentation will support your deductions if the IRS audits you or requests justification for your claims.
Home Sale and Purchase Costs
While costs associated with selling or buying a home don’t directly qualify as moving expenses, they may impact your taxes in other ways. Certain closing costs and real estate taxes paid when purchasing a new home might be deductible or added to your cost basis. These fall under different tax rules and require careful consideration.
To simplify expense tracking, consider using a separate account or credit card for all moving-related costs. This practice makes it easier to categorize and report expenses accurately during tax preparation.
Tax laws change frequently, and individual situations vary. For personalized advice on moving expenses and their tax implications, consult with a qualified tax professional. They can provide guidance tailored to your specific circumstances and help you navigate the complex landscape of tax deductions.
What Expenses Are Not Tax-Deductible for Moving?
Understanding non-deductible moving expenses helps you budget more effectively and avoid surprises at tax time. While some costs may be deductible for active-duty military personnel, many relocation expenses do not qualify for tax deductions.
Meals and Food Costs
The IRS does not allow deductions for meals consumed during your move. This includes food purchased while traveling to your new home or during temporary hotel stays. These costs can add up quickly during a long-distance move, so plan your budget accordingly.
House-Hunting Expenses
The IRS considers trips to search for a new home before your actual move as personal expenses. You cannot deduct costs such as airfare, hotel stays, or car rentals associated with house-hunting trips. To minimize these expenses, use virtual tours and online research to narrow down your options before visiting in person.
Security Deposits and Rental Fees
Security deposits and advance rent payments for your new home are not tax-deductible. The IRS views these costs as part of your living expenses, not moving expenses. However, landlords can generally deduct their rental expenses in the year they pay them.
Vehicle-Related Expenses in Your New Location
Costs to register your vehicle or obtain a new driver’s license in your new state are not deductible as moving expenses. These fees vary significantly from state to state, so research the requirements and fees in your new location to budget accordingly. (Some states offer temporary permits that can help spread out these costs over time.)
Home Improvements and Renovations
Many home improvement projects don’t qualify for tax deductions. However, some might qualify for a tax break or have other tax implications. Keep detailed records of these expenses, as they may impact your capital gains calculations in the future.
Final Thoughts
Tax laws for relocation expenses have changed significantly. Most taxpayers can no longer claim these deductions on federal returns, except for active-duty military personnel. Some states still offer moving expense deductions, so you should check your local tax regulations. We recommend you keep detailed records of all moving-related expenses, even if you cannot claim them now.
The complexities of relocation for work tax deductions require professional guidance. Bette Hochberger, CPA, CGMA provides personalized financial services, including strategic tax planning and preparation. Our team can help you navigate the tax implications of your move and identify potential state-level deductions.
Proper planning and expert advice can help you manage the financial aspects of your relocation effectively. This applies whether you deal with employer reimbursements, state-specific deductions, or budgeting for your move. Professional tax guidance can make a significant difference in your financial outcomes.
