Overview

The Tax Cuts and Jobs Act (TCJA) suspended the moving expense deduction for most taxpayers beginning in 2018 and that suspension remains in effect through tax year 2025. The most important exception is for active‑duty members of the U.S. Armed Forces who move because of a military order and permanent change of station (PCS). For those service members, unreimbursed moving expenses remain deductible and are claimed using IRS Form 3903. (See IRS Publication 521 for details: https://www.irs.gov/publications/p521.)

This article explains who still qualifies, which costs are deductible, how employer reimbursements are treated, recordkeeping best practices, potential state‑tax traps, and practical planning tips I use when advising clients. In my practice guiding hundreds of taxpayers through relocation issues, clear documentation and early coordination with employers and payroll have saved clients from unexpected taxes and audit headaches.

Who still qualifies for a moving expense deduction?

  • Active‑duty U.S. military personnel: If you move because of a military order and a permanent change of station, you may deduct unreimbursed moving expenses on Form 3903 and report the deduction on your federal return. Military members can deduct costs such as moving household goods, travel (including lodging) during the move, and certain storage costs. (IRS Publication 521 and Form 3903: https://www.irs.gov/forms-pubs/about-form-3903)

  • Civilian taxpayers: For tax years 2018 through 2025, civilians generally cannot claim the moving expense deduction. That means taxpayers who relocate for a new job, for a job transfer, or for business reasons cannot deduct moving costs on their federal return during this period unless Congress changes the law.

Note: If you live in a state that allows moving expense deductions on the state return, you must follow that state’s rules even if the federal deduction is disallowed. See the “State tax issues” section below.

Which moving costs are deductible for qualifying military members?

Deductible unreimbursed expenses for qualifying military moves typically include:

  • Transportation and storage of household goods and personal effects (packing, crating, in‑transit insurance).
  • Travel expenses for the service member and household members (commercial transportation or mileage), and lodging while en route (meals are not deductible).
  • Storage of household goods for a limited time if the storage is connected to the move.
  • Certain costs to ship a vehicle when required by orders.

Non‑deductible items include next‑month’s rent at the new location (unless part of a moving service), pre‑move house hunting trip costs for civilians (not deductible under current law), and meals while traveling (meals are not deductible for moving expenses, even for military moves, except in specific nonstandard circumstances).

Always compare amounts reimbursed by your branch of service. If the military reimburses you for qualifying expenses and that reimbursement is not included in your income, you cannot double‑claim the same costs as deductions.

How employer reimbursements are taxed for civilians and military

  • Civilians: Employer payments or reimbursements for moving expenses are generally taxable wages to the employee under the TCJA suspension. That means your employer should include these amounts on your Form W‑2 as taxable income. Even if your employer deducts the payment as a business expense, the amount is taxable to you.

  • Military: Payments or reimbursements provided under military regulations usually remain tax‑free when they qualify under the military moving rules; unreimbursed amounts can be deducted on the service member’s return. Consult your branch’s finance office and IRS guidance to confirm how reimbursements will be reported.

If you’re unsure how an employer will report a reimbursement, ask HR or payroll for written confirmation and document it. In practice, a clear reimbursement policy and early coordination can prevent later surprises during tax filing or under audit.

State tax issues and multi‑state moves

Even though the federal deduction is suspended for most civilians, some states still let taxpayers deduct moving expenses on their state returns or exclude employer reimbursements from taxable state wages. States vary widely:

  • A few states conform to pre‑TCJA federal rules and allow the deduction.
  • Other states adopt the federal suspension, making the deduction unavailable.

Check the tax authority website for the state(s) you’re leaving and arriving in. I often advise clients moving between states to run a simple worksheet comparing payroll withholding, state tax residency rules, and possible credit claims to avoid unexpected state tax bills. Our resources on state withholding and residency can help, for example: How to Handle State Withholding After Moving Mid‑Year and State Residency and Income Tax: Moving Without Surprises.

Internal resources:

Documentation and recordkeeping: what to keep

Thorough records are critical. For any deductible or reimbursed moving cost, retain:

  • Receipts and invoices from moving companies and storage facilities.
  • Mileage logs if you drove your own vehicle (include dates, start/end locations, odometer readings, and purpose).
  • Proof of military orders (for service members), PCS documentation, and any branch reimbursement statements.
  • Employer reimbursement statements and W‑2 copies showing how reimbursements were reported.

I recommend keeping originals or scanned copies for at least three years after the return is filed; if you claim deductions tied to future events (rare), keep records longer. If audited, clear contemporaneous records reduce the likelihood of challenge.

Common mistakes and audit triggers

  • Improperly claiming moving costs on a civilian federal return during the TCJA suspension period.
  • Neglecting to account for employer reimbursements that were reported as wages (leading to double‑counting if you try to deduct the same cost).
  • Missing or incomplete receipts and mileage logs.
  • Confusing relocation expenses that are taxable income (e.g., some sign‑on or relocation bonuses) with deductible moving expenses.

Audit triggers often involve large, undocumented claims or inconsistent reporting between employer W‑2s and taxpayer deductions.

Practical planning tips

  1. Ask HR about reimbursement treatment early. Get written confirmation whether the payments will be reported as taxable wages.
  2. For service members, request a detailed statement of allowances and reimbursements at the time of move and save PCS orders—these are primary evidence for IRS and branch finance offices.
  3. Keep a contemporaneous mileage log if you drive—apps that record trips with timestamps make this simple and defensible.
  4. Consider timing employer reimbursements with payroll to avoid state withholding surprises. Our article on state withholding after moving mid‑year may help plan this step.
  5. If you’re negotiating an employment offer, negotiate a gross‑up or direct payment to the moving company so you’re not left with taxable wages covering relocation costs.

Related reading on negotiating and tax‑efficient moves: Tax‑effective strategies for deducting moving expenses (for historical context and state strategies): https://finhelp.io/glossary/tax-effective-strategies-for-deducting-moving-expenses/

Practical examples (real‑world illustrations)

  • Military example: SPC A receives PCS orders from Fort Bragg to Fort Hood. The military provides partial reimbursement for household goods and travel. SPC A files Form 3903, deducts unreimbursed qualifying expenses, and attaches necessary documentation. The PCS orders and reimbursement statements support the deduction.

  • Civilian example: Jane relocates for a job in 2023. Her employer pays a $10,000 relocation reimbursement and reports it on her W‑2 as wages per employer payroll policy. Under current law, Jane cannot deduct moving costs on her 2023 federal return and must report the $10,000 as taxable income.

What could change after 2025?

The TCJA suspension is scheduled to expire after 2025. Congress could extend, modify, or let the suspension lapse. If the suspension lapses and prior rules return, taxpayers may be able again to deduct moving expenses if they meet the distance and time tests. Because legislation is possible but not guaranteed, factor potential policy changes into longer‑term planning rather than assuming an automatic return to pre‑2018 rules.

Quick FAQs (concise answers)

  • Can I deduct moving expenses for a new job today? Generally no, unless you are an active‑duty service member moving under orders.
  • Will employer relocation payments always be taxable? For civilians, yes—they are generally taxable wages under current federal law; military payments may be tax‑free if they meet military rules.
  • How do I claim military moving expenses? Use Form 3903 and attach it to your Form 1040 (see IRS guidance: https://www.irs.gov/forms-pubs/about-form-3903).

Professional disclaimer

This article is educational and reflects tax law and IRS guidance current as of 2025. It does not replace personalized tax advice. For guidance tailored to your facts—especially if you have large reimbursements, multiple state moves, or complex military pay—consult a qualified tax professional or your branch finance office.

Sources and further reading

Internal links

If you want, I can convert this into a shorter printable checklist for clients or a one‑page worksheet to track moving costs and reimbursements.