Moving Expenses | Tax Reform Update


Prior to 2018, employees were able to take a deduction from their gross income on qualified moving expenses. The employee needed to meet certain tests such as the time test and distance test to qualify for the deduction. A member of the armed forces on active duty that moved because of a permanent change of station was not required to meet the time and distance test. The deduction included the cost of moving household goods, travel expenses, storage, and the reimbursement for personal use of vehicle.

With the passage of the Tax Cut and Jobs Act of 2017 (TCJA), the deduction for moving expenses was eliminated for tax years starting January 1, 2018 through December 31, 2025. There is an exception to the suspension of qualified moving expenses for members of the armed forces on active duty that moved because of a permanent change in station. If an employer reimburses an employee for moving expenses it must be treated as W2 compensation in order for the employer to receive a tax deduction.

The elimination of this deduction under the TCJA is not permanent. It is expected to be reinstated beginning January 1, 2026.

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