Overview

Federal tax law changed with the Tax Cuts and Jobs Act (TCJA). For tax years 2018 through 2025 the moving expenses deduction for most individual taxpayers is suspended, meaning you generally cannot deduct moving costs when you change jobs. There is a key exception: active‑duty members of the U.S. Armed Forces who move because of a military order and permanent change of station (PCS) can still claim qualifying moving expenses (see IRS Publication 521) (IRS, Pub. 521).

In my practice advising clients on job-related moves, I routinely see confusion about what’s deductible today. Employers sometimes offer moving reimbursements, employees assume deductions still apply, and small‑business owners wonder whether their moves qualify. This article explains who still benefits, which costs were historically deductible, how to document and report them if you qualify, and alternative planning steps to consider.

Who still qualifies for a deductible moving expense?

  • Active‑duty military personnel moving under a PCS order: still eligible to deduct reasonable moving expenses and use Form 3903 to report them (IRS Form 3903).
  • Employers and business owners: moving costs may be deductible as ordinary and necessary business expenses if the move is for the business (e.g., moving an office or substantial business equipment). This is not the same as the personal moving expense deduction and requires careful substantiation.
  • Other employees and job changers: generally not deductible for federal tax purposes through 2025. If Congress changes the law after 2025, eligibility could revert to earlier rules.

(Source: IRS Publication 521; see Details and forms at https://www.irs.gov/publications/p521 and https://www.irs.gov/forms-pubs/about-form-3903.)

What were the classic requirements (Distance and Time tests)?

Before the TCJA suspension, tax law required two objective tests for most employees:

  1. Distance test: The new job location had to be at least 50 miles farther from your former home than your previous workplace was.
  2. Time test: You generally had to work full‑time in the new location for at least 39 weeks during the first 12 months after the move (or special rules for self‑employed taxpayers: 78 weeks, with at least 39 weeks for self‑employment).

Although these tests are currently dormant for most taxpayers at the federal level, they still illustrate the historical gatekeepers the IRS used to limit abuse. State tax treatment varies — some states never conformed to TCJA or have their own rules — so always check state guidance or the related FinHelp pages on state residency and moving between states.

Which moving costs are (or were) deductible?

When the deduction applied, allowed costs were tightly defined. The most commonly deductible categories were:

  • Transportation of household goods and personal effects (moving van, movers, packing materials).
  • Travel costs for you and household members from the old home to the new home (mileage or actual vehicle costs and limited lodging; meals were not deductible).
  • Storage costs for household goods for up to 30 consecutive days after leaving your former home and before moving into the new home, when such storage was necessary.
  • Insurance for moving household goods.

Common nondeductible costs included meals while traveling, house‑hunting trip expenses, costs to buy or sell a home, temporary living expenses not meeting the statutory rules, and improvements to either home.

(Source: IRS Publication 521.)

How to document and report (if you qualify)

  • Keep receipts and a contemporaneous mileage log for vehicle use. Record dates, destinations, purpose, miles driven, and costs paid to moving companies.
  • Save moving company contracts and inventory lists. Note storage start/end dates to demonstrate the 30‑day rule when applicable.
  • If you are an active‑duty service member, use Form 3903 (Moving Expenses) to compute and report the deduction (IRS Form 3903).
  • Business owners claiming equipment or office‑move expenses should document the business purpose, allocate costs between personal and business when needed, and report expenses on the appropriate business tax return (Schedule C for sole proprietors, or the applicable entity return).

Even if you can’t deduct the move federally, detailed records help with employer negotiations, potential state deductions, and business expense claims.

Employer reimbursements: taxable or tax‑free?

Since TCJA, employer reimbursements for moving expenses given to most employees are treated as taxable wages and must be included on Form W‑2. There is an important exception for qualifying military moves. That means an employer’s offer to pay your moving costs often relieves you of an out‑of‑pocket expense but does not necessarily give you a federal deduction. Review any written moving reimbursement agreement carefully and consult payroll or tax counsel if you get a large lump‑sum payment.

State tax differences to watch for

A number of states maintain their own rules for moving expense deductions or addbacks when federal law disallows a deduction. If you move across state lines, you may still be able to claim a deduction on your state return or need to add back a federal deduction disallowed by the state. See FinHelp’s state moving pages for deeper guidance on multi‑state moves and state residency rules.

Relevant internal reading:

Practical examples

1) Active‑duty military: Sergeant A receives PCS orders and hires a moving company for household goods. She keeps invoices and completes Form 3903 to report the deduction. Because the military exception remains active, those expenses reduce her taxable income.
2) Private employee: Jordan accepts a job 60 miles farther from his old home. His employer reimburses $7,500 for packing and storage. Under current federal law Jordan cannot deduct moving expenses; the reimbursement is taxable income (unless the employer treats it differently and proper payroll withholding occurs). Jordan should still save all receipts and confirm whether his new or prior state offers any deductions.
3) Small‑business owner: Lee moves her registered business and substantial machinery to a new state to expand operations. She treats moving of equipment as a business expense and documents the business purpose and costs on her business return. Those costs are not claimed on Form 1040 as a personal moving expense.

Common mistakes and how to avoid them

  • Assuming the deduction is available: Don’t assume you can deduct a job‑related move. Check the current law and exceptions.
  • Poor recordkeeping: Lack of contemporaneous receipts and mileage logs makes it difficult to substantiate deductions or employer reimbursements.
  • Confusing federal and state rules: Always verify state tax treatment — some states still allow deductions or have their own rules.

Planning tips

  • Negotiate employer assistance as gross reimbursement rather than an assumption you’ll deduct the cost. Ask whether reimbursement is treated as taxable wages and if payroll taxes will be withheld.
  • If you’re the business owner, plan the move so that business expenses are clearly separable and documented. Consider whether leasing equipment or using third‑party logistics alters the tax treatment.
  • For military members, follow the IRS instructions carefully and use Form 3903 to ensure you claim the full allowable deduction.

Bottom line

For most people changing jobs today, moving expenses are not deductible on federal returns through 2025 — the notable exception is active‑duty military members moving under PCS orders. Business moves may be deductible on the business return if they qualify as ordinary and necessary expenses. Good records, careful negotiation with employers, and attention to state rules are the most practical steps you can take. For complex situations, I recommend consulting a CPA or tax advisor who can review your facts and help position moving costs appropriately.

Professional disclaimer: This article is educational and does not replace personalized tax advice. For guidance tailored to your situation, consult a qualified tax advisor or the IRS directly (see IRS Publication 521 and Form 3903).

Authoritative sources