The Tax Cuts and Jobs Act of 2017 overhauled moving expense tax deductions.
As of February 2022, only military members are eligible for federal tax deductions for moving expenses.
Moving expenses are either tax-deductible or non-deductible.
Back in the day, one of the perks of moving was that you could write-off your moving expenses on your annual taxes. But a few years ago, the deduction eligibility standards changed, and now, only a select group can take advantage of the tax cut. If you’ve recently moved or plan to, read on for more information about what to expect during tax season.
What is The Tax Cuts and Jobs Act of 2017?
Many taxpayers assume moving expenses, such as hiring a moving company, are tax deductible. However, in 2017, Congress passed the Tax Cuts and Jobs Act that eliminated the moving costs deduction. This change is set in place until the tax year of 2025. After that, lawmakers will decide whether or not to bring back the deductions for more Americans.
However, if you serve in the active military, you and your dependents can likely look forward to moving deductions at tax time. To claim this tax deduction, you must be an active duty member of the military who moved as a result of a military order and permanent change of station (PCS).
Can Non-Military Members Get a Tax Deduction for Moving Expenses?
Although you cannot claim your moving expenses on your federal tax return unless you’re an active duty military member, there may be other options to save. Some states still allow moving tax reductions or exclude moving reimbursement from income, including California, New York, New Jersey, Arkansas, Hawaii, Massachusetts, and Pennsylvania.
It’s worth noting that it's considered taxable income if your employer provides a moving allowance and pays for your relocation. However, it's possible your employer may offset the tax implications by offering a larger relocation package, so it’s essential to keep up with all of your move’s records and receipts for your tax return.
Tax Deductions for Active Military Members
Active duty military members and their dependents who have Permanent Change of Station (PCS) orders can add moving expenses to their tax deductions. A PCS includes the following:
Moving from your home to your first post of active duty
Moving from one permanent post of duty to another
Moving from your last post of duty to your home or a nearer point within the United States. The move must happen within one year of ending your active duty or within the period allotted under the Joint Federal Travel Regulations.
If you are a service member, many of your moving expenses are paid in full or in part through your military allowances, so you can’t claim any expense already paid for by the government, including mileage and lodging. You can deduct unreimbursed moving expenses for your family if you pay the costs for a DIY move.
Examples of Deductible Moving Expenses for Military Members
Take a look at these items that active duty military members can deduct from their taxes:
Professional moving company services
Payment for help for loading and unloading belongings
Portable on-demand containers
Packing supplies like blankets, boxes, and packing tape
Moving truck rental
Car maintenance, including gas and oil changes
Temporary self-storage for up to 30 days
Stop and start fees for essential utilities
Examples of Non-Deductible Items for Military Members
Unfortunately, not every moving expense is deductible. Here are a few non-deductible items:
Pre-move scouting trips to your new location
Short-term or temporary lodging in between moves
Fees associated with a rental lease