Overview
Moving-related costs can be large and confusing when it comes to taxes. The Tax Cuts and Jobs Act (TCJA) suspended the miscellaneous moving expense deduction for most taxpayers for tax years 2018 through 2025. The primary exception is active-duty members of the U.S. Armed Forces who move because of a permanent change of station (PCS). This article explains who can claim deductions, which costs qualify, how employer reimbursements are treated, recordkeeping best practices, and where to find authoritative guidance.
Author’s note: In my practice advising clients on tax and relocation decisions, I’ve seen avoidable errors around employer reimbursements and the difference between employee and business deductions. The guidance below reflects current IRS rules and common real-world pitfalls.
Sources: Internal Revenue Service guidance on moving expenses and Form 3903 (see IRS links below) and related FinHelp content.
Who currently qualifies to deduct moving expenses?
- Active-duty members of the U.S. Armed Forces who move because of a permanent change of station (PCS). These service members and their families may claim qualified moving expenses on Form 3903. (See IRS: About Form 3903.)
- Most civilian employees cannot claim a moving-expense deduction for tax years 2018–2025 under the TCJA suspension.
- Self-employed taxpayers and businesses cannot use the personal moving-expense deduction; however, businesses can deduct relocation or moving costs as ordinary and necessary business expenses when the move is a business cost. That is a separate tax treatment.
IRS reference: See IRS Moving Expenses Overview (https://www.irs.gov/individuals/moving-expenses) and Form 3903 (https://www.irs.gov/forms-pubs/about-form-3903).
Internal links: For specific military guidance on reporting, see FinHelp’s Moving Expenses Deduction (for military) and our page on Form 3903 – Moving Expenses. For business relocation deductions, see FinHelp’s Business Relocation Expenses Deduction.
- Moving Expenses Deduction (for military): https://finhelp.io/glossary/moving-expenses-deduction-for-military/
- Form 3903 – Moving Expenses: https://finhelp.io/glossary/form-3903-moving-expenses/
- Business Relocation Expenses Deduction: https://finhelp.io/glossary/business-relocation-expenses-deduction/
What counts as a deductible moving expense for qualifying military members?
Qualified moving expenses typically include:
- Transportation and storage of household goods and personal effects (moving vans, packing, crating, insurance for transit).
- Travel to the new home (airfare, lodging). Note: Meals during travel for moving are generally not deductible for Form 3903 purposes—check current Form 3903 instructions.
- Storage of household goods for up to a specified time if reasonably necessary.
Expenses that are not deductible under the moving expense rules include: the cost of breaking a lease, house-hunting travel, and temporary living expenses at the new location unless specifically allowed by IRS guidance for service members.
Always check the current Form 3903 instructions for allowed and disallowed items (IRS: About Form 3903).
Employer reimbursements and taxation
- For tax years 2018–2025, employer-paid moving expenses (reimbursements or direct payments to a moving company) are generally taxable income to the employee unless the worker is an active-duty military member moving due to a PCS. Employers typically include these reimbursements in wages on Form W-2.
- If your employer paid or reimbursed your moving costs in a year when the deduction was suspended for civilians, you cannot deduct those costs on your individual tax return; instead, the reimbursement usually remains taxable.
Practical point: If your employer offers a relocation package, ask whether they will gross-up pay to cover the tax on the reimbursement or instead perform direct billing with a third-party moving firm. Neither approach changes the tax treatment under current law for non-military employees, but it affects your take-home pay.
Self-employed and business moves: different rules
Businesses and self-employed individuals do not use the personal moving expense deduction. If the move is for business purposes, the company or self-employed person may deduct reasonable moving and relocation expenses as business expenses under ordinary and necessary expense rules. This treatment depends on whether the expenses are made in the course of running the business and meet ordinary-and-necessary criteria. Consult a tax pro to structure these deductions correctly and to distinguish them from personal moving costs.
For more on business-focused moves, see FinHelp’s Business Relocation Expenses Deduction (linked above).
State tax differences
Many states follow federal treatment of moving expenses, but not all. A few states may still allow their own moving expense deductions or have different rules for taxable employer reimbursements. Always check your state’s tax authority guidance or ask a preparer familiar with that state.
Documentation and recordkeeping checklist
Good records make audits and returns simpler. Keep these documents for at least three years (longer if your tax situation requires):
- Receipts and invoices from movers and storage providers.
- Bills of lading and shipment inventory records.
- Airline, bus, or other travel receipts (ticket stubs, hotel invoices).
- Copies of orders and PCS documents for military members that show official relocation requirements.
- Employer communications about relocation packages and any reimbursement amounts reported on Form W-2.
In my experience, a simple folder or scanned file with receipts and a short log that ties dates and costs to each line item reduces preparation time and supports deductions if questioned.
Examples (illustrative)
1) Active-duty service member: Maria receives PCS orders and pays $3,200 to transport household goods and $400 in travel lodging while en route. She reports qualified amounts on Form 3903 and deducts the valid moving costs. The reimbursement she receives from the military for authorised moving allowances may be nontaxable under military pay rules (confirm current instructions).
2) Civilian employee: James moves for a new job in 2024 and his employer reimburses $7,000 for moving expenses. Under current law, James cannot claim a personal moving-expense deduction, and the reimbursement is taxable to him unless his employer handled a specific exclusion (rare under current federal rules). He should see how the amount appears on his W-2 and plan for the tax impact.
3) Small-business owner: A consulting firm relocates its office. The owner documents relocation costs, treats them as business expenses, and deducts them on the company’s return as ordinary and necessary business expenses (not a personal moving expense).
Common mistakes and how to avoid them
- Mistake: Treating employer reimbursements as deductible personal expenses. Reality: For non-military taxpayers, those reimbursements are taxable and not deductible. Check how the amount appears on your W-2.
- Mistake: Assuming house-hunting or lease break fees are deductible. These are typically not deductible under moving expense rules.
- Mistake: Poor documentation. Keep itemized receipts and inventories.
What to watch for: possible future changes
TCJA provisions are scheduled to expire or change after 2025 unless Congress acts. That means the suspension of moving expense deductions for civilians could end, reintroducing the old distance and time tests. Watch Congressional tax proposals and IRS updates before filing for a year in which legislation changes.
Action steps if you moved or plan to move
- Determine your eligibility: Are you an active-duty service member moving for PCS? If no, assume the deduction is suspended for federal tax purposes.
- Collect receipts and move-related documents as listed in the checklist above.
- Review your W-2 and employer communications about any reimbursements; plan for the tax impact.
- If self-employed or a business, discuss with your tax advisor whether relocation costs qualify as deductible business expenses.
- Consult the IRS moving-expenses page and Form 3903 instructions for the most current filing details (links below).
Professional disclaimer
This article is educational and not personalized tax advice. Rules change, and individual situations vary. Consult a qualified tax professional or the IRS for advice tailored to your facts and for updates after 2025.
Authoritative resources
- IRS — Moving Expenses Overview: https://www.irs.gov/individuals/moving-expenses
- IRS — About Form 3903, Moving Expenses: https://www.irs.gov/forms-pubs/about-form-3903
- Consumer Financial Protection Bureau — moving costs and planning (general guidance): https://www.consumerfinance.gov
Internal FinHelp links referenced in the article:
- Moving Expenses Deduction (for military): https://finhelp.io/glossary/moving-expenses-deduction-for-military/
- Form 3903 – Moving Expenses: https://finhelp.io/glossary/form-3903-moving-expenses/
- Business Relocation Expenses Deduction: https://finhelp.io/glossary/business-relocation-expenses-deduction/
If you want, bring specific numbers from your move (dates, receipts, employer forms) to a tax preparer — that makes an accurate determination faster and reduces surprises on your tax return.
