Can You Deduct Moving Expenses on Your US Tax Return?
Published on October 24, 2024
by Jeff Patterson
Jeff Patterson is an American living in Scotland and joined the team at Expat Tax Online after experiencing the complexities of living abroad with a family.
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For most taxpayers, moving expenses are no longer tax-deductible. The Tax Cuts and Jobs Act (TCJA) of 2017 removed this deduction, and the change is set to last until 2026.
However, there is an exception for active-duty military personnel. If you’re in the military and are moving due to a permanent change of station (PCS), you can still deduct qualifying expenses.
What did the Tax Cuts and Jobs Act change?
The TCJA brought significant changes to the tax code. It doubled the standard deduction and lowered individual tax rates, but it also removed several deductions, including moving expenses for non-military taxpayers.
Previously, civilians who moved for work could deduct costs if they met distance and time tests. Now, only military personnel can benefit from this deduction.
Who qualifies for the moving expense deduction?
Currently, only active-duty military members qualify if they are moving because of a PCS. This includes moves from one permanent duty station to another.
Everyone else, including civilians who move for job-related reasons, must wait until 2026, when the TCJA provisions are set to expire.
Are moving expenses deductible in certain states?
While federal tax law no longer allows for the deduction of moving expenses, some states have chosen to retain it. This means that, depending on where you live, you might still be able to deduct moving costs on your state tax return.
States that currently offer this deduction include:
- Arizona
- California
- Massachusetts
- New Jersey
- New York
- Virginia
If you’ve moved to or from one of these states, it’s worth checking the specific rules for deducting moving expenses at the state level.
What expenses can military members deduct?
Active-duty military members moving due to a PCS can still deduct several types of moving-related expenses, including:
- Transportation of household goods: You can deduct the cost of moving your belongings to your new home.
- Storage fees: If you need to store your household items for up to 30 days, these fees are deductible.
- Travel expenses: Lodging costs for you and your family during the move are deductible, though meals during the trip are not.
What expenses are no longer deductible?
Commonly non-deductible items include meals, house-hunting trips, and temporary housing.
The TCJA suspended these deductions until at least 2026, except for military personnel who are still eligible under certain conditions.
Are moving expense reimbursements still taxable?
For most taxpayers, moving expense reimbursements are now considered taxable income. Under the TCJA, unless you’re a military member moving due to a PCS, any amount reimbursed by your employer for moving expenses must be included as taxable income on your return.
What to do if your state allows moving expense deductions
If you’re in a state that still allows moving expense deductions, it’s important to gather all receipts and documentation related to your move.
Each state has its own rules, so working with a tax professional or using tax preparation software can help ensure you claim all eligible deductions on your state tax return.
Can moving expenses for international relocations be deducted?
Yes, if you are active-duty military and are required to move internationally due to a Permanent Change of Station (PCS), you can still deduct certain moving expenses. These include transportation of household goods and lodging costs (excluding meals), regardless of whether the move is domestic or international.
How can military personnel claim moving expense deductions?
Military members can claim deductions by filing IRS Form 3903.
Here’s the process:
- Obtain Form 3903: Download the form from the IRS website.
- Fill in your personal details: This includes your name and Social Security number.
- Enter expenses: On Line 1, list the cost of moving your household goods. Line 2 is for travel and lodging expenses, excluding meals.
- Calculate the deduction: The form will help you determine the total deductible amount.
- Attach Form 3903: Submit the completed form with your Form 1040 when filing your tax return.
What about self-employed individuals?
For self-employed individuals, the moving expense deduction has been suspended until 2026, unless they qualify under military exceptions. Before the TCJA, civilians, including the self-employed, could deduct work-related moving expenses, but this rule no longer applies.
How are employer-reimbursed moving costs taxed?
Starting in 2018, employer reimbursements for moving costs became taxable under the TCJA. This means that if your employer covers your moving expenses, those amounts are added to your gross income and taxed accordingly.
Active-duty military personnel still enjoy an exemption, as their employer-reimbursed moving costs remain tax-free.
Are there any state-specific rules for moving expense deductions?
Although moving expenses aren’t deductible on federal returns for most taxpayers, a few states still allow these deductions. If you live in California, New York, or New Jersey, for example, state tax laws may offer the chance to deduct eligible moving costs, even though the federal government does not.
It’s a good idea to check your state’s specific tax rules or consult a tax professional to determine eligibility.
