Who still qualifies to deduct moving expenses?
The moving‑expense deduction that once helped many taxpayers reduce taxable income has been largely curtailed by the Tax Cuts and Jobs Act (TCJA). From tax year 2018 through at least 2025, the deduction is suspended for most civilian taxpayers. The main, routine exception is for active‑duty members of the U.S. Armed Forces who move because of a permanent change of station (PCS). (See IRS Publication 521 and Form 3903 for details: https://www.irs.gov/publications/p521 and https://www.irs.gov/forms-pubs/about-form-3903.)
In this article I’ll explain who still qualifies, what moving costs are typically allowed for qualifying military members, how to document expenses, filing steps, common misconceptions, and alternative ways civilians can manage or offset moving costs.
Why the rules changed
Before the TCJA, many employees could deduct qualifying moving expenses if they met a distance and time test. The TCJA suspended that deduction for tax years 2018–2025 for employees who are not active‑duty military, and it also made most employer moving expense reimbursements taxable to the employee. The change was intended to broaden taxable income and simplify tax rules, but it reduced available deductions for job‑related moves. (See IRS Topic 455 for background: https://www.irs.gov/taxtopics/tc455.)
Who currently qualifies
- Active‑duty members of the U.S. Armed Forces moving because of a military order and a permanent change of station (PCS) can still deduct eligible moving expenses and may be able to exclude certain reimbursements. Use Form 3903 to report these expenses and reimbursements. (IRS Form 3903: https://www.irs.gov/forms-pubs/about-form-3903.)
- Civilians, including employees who change jobs or relocate for work, generally cannot claim the moving expense deduction through at least 2025.
- Business owners and self‑employed taxpayers may be able to deduct moving costs as ordinary and necessary business expenses if the move is directly connected to a trade or business; the rules differ from the personal moving expense deduction and need careful classification.
What expenses qualify for military taxpayers
For an active‑duty service member moving because of a PCS, allowable expenses typically include:
- Reasonable costs for moving household goods and personal effects (packing, crating, shipping).
- Transportation costs to move the household, including mileage for a personally owned vehicle or the cost to ship a vehicle.
- Lodging while traveling from the old home to the new one (meals are not deductible).
- Storage of household goods for up to 30 consecutive days after the move.
Do not include costs that are personal or non‑moving related (e.g., pre‑move house hunting trips, costs of selling or buying a home, or commuting expenses).
Documentation and recordkeeping
Good recordkeeping determines whether you can substantiate a deduction and protects you if the IRS asks questions. For qualifying military moves, keep:
- Receipts from moving companies, truck rentals, and storage facilities.
- Mileage logs showing dates, start and end locations, odometer readings, and purpose for personal‑vehicle travel.
- Lodging receipts (meals are not deductible).
- Copies of military orders that show the PCS and effective dates.
- Records of any reimbursements received from an employer or the military.
If you receive a moving allowance or reimbursement, save the paperwork that shows whether it was paid under an accountable plan and whether it was included on W‑2 income. Military members often can exclude qualified reimbursements from income; check Form 3903 instructions and Publication 521 for details (https://www.irs.gov/publications/p521).
How to claim the deduction (for qualifying military members)
- Complete Form 3903, Moving Expenses, to calculate deductible costs and the amount of any excludable reimbursements. Attach the form to your Form 1040 when you file your federal return.
- Include copies of orders and keep receipts in case of audit. The IRS can request substantiation.
- If you’re self‑employed and moving for business reasons, consult a tax pro; deductible treatment may require different forms and supporting documentation.
Common mistakes and misconceptions
- Assuming the old distance and time tests still apply. Those rules were set aside for most taxpayers by the TCJA. Only active‑duty military members moving under PCS retain broadly similar treatment.
- Forgetting to track mileage. If you use a personal vehicle to move household goods, mileage at the IRS standard rate or actual costs can be deductible. Document dates and odometer readings.
- Misclassifying expenses. Business moves and personal moves have different tax treatments; don’t claim personal moving costs on a business return without clear business purpose and documentation.
- Overlooking state rules. Some states did not adopt the TCJA suspension; a moving expense deduction or different treatment may apply on state returns. Check your state tax authority.
Practical alternatives and employer reimbursements
For civilians who can’t claim a federal moving expense deduction, consider these options:
- Employer reimbursements: Negotiate a moving package with your employer. While most employer‑paid moving reimbursements are taxable to the employee at the federal level (for tax years covered by the TCJA), a direct reimbursement still offsets your out‑of‑pocket cost.
- Signing/relocation bonuses: Some employers offer taxable bonuses to cover moving costs. Budget and track real costs versus the bonus.
- Deductible business moves: If you run a business or are self‑employed and a move is primarily for business reasons, some moving costs may be deductible as business expenses—discuss classification and reporting with a CPA.
How this affects military members vs. civilians — examples
Military example: An Army sergeant receives PCS orders from Fort Liberty, NC, to Fort Hood, TX. He pays a moving company to pack and ship household goods, rents a truck for the drive, and pays for two nights’ lodging during travel. He keeps receipts and a copy of his orders and files Form 3903 to claim the deductible moving expenses. Any portion reimbursed by the military that qualifies under the rules is excluded from income as described in Publication 521.
Civilian example: A software engineer relocates for a new job in a different state in 2024. Because the moving expense deduction for employees is suspended, the engineer cannot deduct unreimbursed moving costs on the federal return. If the employer offers a relocation allowance, that payment is typically taxable; however, it still reduces the engineer’s net out‑of‑pocket expense.
Where to learn more and helpful links
- IRS Publication 521, Moving Expenses: https://www.irs.gov/publications/p521
- IRS Form 3903, Moving Expenses (for members of the Armed Forces): https://www.irs.gov/forms-pubs/about-form-3903
- IRS Topic 455 — Moving Expenses (overview): https://www.irs.gov/taxtopics/tc455
Internal FinHelp resources
- Read our guide, “When Moving Expenses Are Tax‑Deductible: Current Rules,” for a plain‑language summary of who qualifies and why rules changed: When Moving Expenses Are Tax-Deductible: Current Rules (https://finhelp.io/glossary/when-moving-expenses-are-tax-deductible-current-rules/).
- For military members, see our focused article “Moving Expenses Deduction (for military)” which walks through Form 3903 line‑by‑line and common documentation: Moving Expenses Deduction (for military) (https://finhelp.io/glossary/moving-expenses-deduction-for-military/).
- If you need to track related paperwork, our “Form 3903 — Moving Expenses” primer covers where to enter amounts and what to attach: Form 3903 – Moving Expenses (https://finhelp.io/glossary/form-3903-moving-expenses/).
Professional tips (quick checklist)
- Keep copies of military orders and all receipts.
- Maintain a contemporaneous mileage log if you use personal vehicles.
- Don’t mix personal expenses with moving expenses—itemize and label everything.
- If you receive a relocation payment, review whether it was included in W‑2 wages.
- Consult a tax professional when in doubt—especially for mixed civilian/military households or self‑employment issues.
Disclaimer
This article is educational and not personalized tax advice. Tax rules change and state tax treatment can differ from federal rules. For guidance specific to your situation, consult a licensed CPA, tax attorney, or the IRS resources linked above.
