Can I Deduct Moving Expenses if My Employer Reimburses Me? + FAQs

According to a recent IRS report, over 1.1 million Americans claimed a moving expense tax deduction in 2015 – saving hundreds of millions of dollars on their taxes. No, you generally cannot deduct moving expenses if your employer reimburses you under current U.S. tax law.

Recent tax reforms have eliminated this deduction for most people, closing what many thought was a helpful loophole. In this comprehensive guide, we’ll break down exactly why that is, explore key exceptions and state-level quirks, and provide Ph.D.-level insights into the legal framework behind moving expense deductions.

Expect an engaging deep dive into federal rules, state nuances, and real-world examples – all explained clearly so you can make confident decisions about your relocation benefits and tax returns.

🚚 Straight Answer Upfront: Find out immediately whether you can claim a tax break for moving when your company foots the bill, and why recent law changes upended this popular deduction.
💼 Tax Law Changes & Exceptions: Learn how the Tax Cuts and Jobs Act (TCJA) wiped out moving expense write-offs for most taxpayers, the rare exceptions (like military moves), and what that means for you.
🌍 State-by-State Differences: Discover which states (like California and New York) still allow moving expense deductions or exclude reimbursements from income – even though the federal government doesn’t – and how to navigate these nuances.
📖 IRS Rules, Forms & Cases: Understand the official IRS guidance, including Form 3903, Publication 521, and tax code sections, along with key court rulings that shape how moving expenses are treated.
⚖️ Pros, Cons & Pitfalls: Weigh the benefits and drawbacks of employer-paid relocations vs. out-of-pocket moves. Avoid common tax pitfalls (double-dipping, ineligible expenses) and get quick answers to FAQs about moving expenses and taxes.

Can You Deduct Moving Expenses If Reimbursed? (The Direct Answer)

Let’s cut to the chase: if your employer reimburses your moving costs, you typically cannot deduct those moving expenses on your tax return. This is true for two big reasons. First, U.S. tax law has long barred “double-dipping” – you can’t take a deduction for an expense that someone else (like your employer) already paid for on your behalf. Second, as of 2018, the federal tax code no longer even offers a moving expense deduction to most taxpayers at all, thanks to the Tax Cuts and Jobs Act of 2017 (TCJA).

Under current federal rules, moving expenses aren’t deductible for the vast majority of people. Prior to 2018, individuals could claim an above-the-line deduction for certain moving costs if they moved for a new job and met specific distance and time tests. However, the TCJA suspended this deduction from 2018 through 2025 for everyone except active-duty military members moving on orders. That means if you moved during this period and you’re not military, no moving expenses can be written off on your federal return – regardless of whether you paid them yourself or your company reimbursed you.

Employer Reimbursement = No Out-of-Pocket, But Also No Deduction. Even before the TCJA’s sweeping changes, tax law prevented you from deducting any moving expenses that were reimbursed by your employer. The logic is simple: since you didn’t actually bear those costs (your employer did), you have no financial loss to deduct. For example, if your company paid $5,000 to a moving company for you, you can’t also claim that $5,000 as a deduction. It’s the same principle as an insurance reimbursement – you can’t claim a loss that was repaid to you.

Today, post-TCJA, this principle still holds, and the deduction itself is mostly gone. So if your employer covers your moving bills, the bottom line is you typically get no tax deduction for those moving expenses. Instead, you might face another issue: whether that reimbursement is considered taxable income. (Spoiler: in many cases it is, which we’ll explore later.)

Exceptions – When a Deduction Might Still Apply: The only notable federal exception is for U.S. Armed Forces personnel on active duty. If you’re an active-duty military member moving due to a military order (a permanent change of station), you can deduct unreimbursed moving expenses. But even then, if the military reimburses or directly pays for your move, you can’t deduct those government-covered costs. Outside of military moves, Congress has shut the door on moving write-offs until at least 2026. After 2025, the deduction is scheduled to come back (if no new law intervenes), but for now, the answer to our question is a resounding “no” in almost all cases.

What to Avoid When Handling Moving Expenses on Your Taxes

When dealing with moving expenses and taxes, there are several pitfalls to avoid. These mistakes can cost you money or even trigger IRS issues. Here’s what not to do when it comes to employer reimbursements and moving costs:

❌ Attempting to Deduct Reimbursed Expenses: Don’t try to claim a tax deduction for moving costs that your employer paid for or reimbursed. The IRS will disallow this immediately. Deducting reimbursed expenses is considered a form of double-dipping and can lead to penalties. Always separate what you paid out-of-pocket from what was covered by your company.
❌ Deducting Moving Expenses as a Regular Employee (Post-2018): Avoid claiming moving expenses on your federal return if you’re not an active-duty military member. Many taxpayers used to deduct moves prior to 2018 and might not realize the law changed. As of now, the deduction isn’t available for most people – putting it on your tax form will raise a red flag. (Remember, if you use tax software, it likely won’t even offer Form 3903 for non-military moves anymore.)
❌ Including Non-Qualified Costs: Even if you could deduct moving expenses (e.g. you’re military or you’re taking a state deduction), don’t include costs that aren’t allowed. For instance, home-hunting trips, realtor fees, closing costs, new driver’s license fees, or meal expenses during the move are not deductible as moving expenses. Only specific categories (like packing and shipping your household goods, travel and lodging during the move, storage unit fees, etc.) qualify. Including non-eligible expenses will risk your deduction being partially denied.
❌ Ignoring State Tax Rules: Don’t assume your state taxes follow the federal rules to the letter. Some people forget that a few states still allow moving deductions or exclude employer reimbursements from state income. On the flip side, others might try to deduct moving costs on a state return that doesn’t permit it. Failing to research your own state’s stance could mean missed benefits or incorrect tax filings.
❌ Forgetting to Report Taxable Reimbursements: If your employer reimbursed you for moving and you’re not in an exempt category, that reimbursement is likely taxable income. Don’t overlook it – your employer should include it on your Form W-2 (often in your wage amount). Avoid the mistake of thinking “it was just a reimbursement, not income.” The IRS considers most employer moving expense payments as taxable compensation now, so they must be reported.

By steering clear of these errors, you can handle your move-related taxes confidently. In short: don’t double-dip, stay within the rules for what counts as a moving expense, and pay attention to the post-2018 law changes and any special state provisions. Next, let’s look at some concrete examples to illustrate these points.

Detailed Examples: When Can Moving Costs Be Deducted (and When Not)?

To truly understand how the rules play out, let’s explore a few real-world scenarios. These examples show what happens in different situations involving moving expenses, employer reimbursements, and tax deductions:

Scenario	Tax Outcome
1. Moved in 2023, Non-Military, Fully Reimbursed – You relocated for a new job in 2023 and your employer paid all your moving bills (say $8,000) directly to the movers or reimbursed you.	No federal deduction. You can’t deduct any moving expenses on your federal return (TCJA disallows it). The $8,000 your employer paid is treated as taxable wages to you (meaning it’s on your W-2 and you owe tax on it), unless you’re in a state that excludes it. On your state return, you’d only get a break if your state allows an exclusion (e.g. New York would not tax that $8,000) or a deduction.
2. Moved in 2023, Non-Military, Not Reimbursed – You paid $5,000 out-of-pocket to move for a new job, and your employer did not cover any of it.	No federal deduction. Despite bearing the costs yourself, you get no federal write-off (again, TCJA’s suspension applies). For state taxes, a few states might let you deduct this $5,000 (see the state section below). Federally, it’s simply a personal expense now.
3. Moved in 2017 (Pre-TCJA), Partially Reimbursed – You moved in mid-2017 for work, spent $4,000 on qualified moving items, and your employer reimbursed $2,500 of it (included as income on your W-2 because it wasn’t under an accountable plan).	Deduction allowed (under old rules). On your 2017 federal return, you could deduct the full $4,000 of moving expenses using Form 3903, but you also had to report the $2,500 reimbursement as income. The deduction would offset the income inclusion, leaving you effectively deducting the $1,500 you paid net out-of-pocket. (On many state returns in 2017, the same deduction would apply.) This scenario illustrates how it worked before the law change – a stark contrast to today’s treatment.
4. Active-Duty Military Move in 2023, Unreimbursed – You’re an active-duty servicemember ordered to relocate to a new base, and you spend $3,000 moving your family, none of which was reimbursed by the government.	Deduction allowed (military exception). You can deduct the $3,000 on your federal return despite the TCJA, because military moves are exempt from the suspension. You’d fill out Form 3903 to claim it. If the military had reimbursed you for that $3,000, it would be excluded from your income (not taxed) and you wouldn’t deduct it.
5. Move to California in 2023, Not Reimbursed – You moved from Texas to California for work, spent $6,000 out-of-pocket. Federal law doesn’t allow a deduction, but how about California state taxes?	State deduction in CA. California is a state that did not conform to the federal suspension on moving expenses. You cannot deduct the $6,000 on your federal 1040, but on your California state income tax return, you can claim a moving expense deduction for the qualified costs. You’d need to maintain the same documentation (and meet distance/time tests) for California purposes. This means you get some tax relief at the state level even though the IRS gave none.

These examples highlight a few key takeaways: post-2018 moves generally get no federal deduction (unless you’re military), employer reimbursements nowadays are taxable and not deductible, and state rules can create a different outcome for the same move. Always consider the timing of your move (pre-2018 vs post-2018), your employment status (civilian vs armed forces), and where you live, to know the exact tax treatment.

Legal Evidence: Tax Code, IRS Guidance & Court Rulings

It’s important to see the authoritative foundations behind these rules. U.S. tax law and IRS regulations explicitly address moving expenses and reimbursements. Here we’ll break down the legal evidence supporting why you can’t deduct employer-reimbursed moves in most cases.

Internal Revenue Code Provisions: The allowance (or disallowance) of moving expense deductions is rooted in the tax code. Internal Revenue Code Section 217 is the provision that historically permitted an above-the-line deduction for moving expenses related to starting a new job. Section 217 lays out the criteria – including the famous 50-mile distance test and 39-week work test – that defined a deductible move. However, the Tax Cuts and Jobs Act (TCJA) of 2017 included a clause that essentially suspended Section 217 for tax years 2018 through 2025 for everyone except active military. In other words, Congress put a giant pause on this deduction to simplify the tax code and raise revenue. The TCJA is Public Law 115-97, signed by President Donald Trump in December 2017, and it specifically carved out moving expenses as one of the tax breaks to eliminate temporarily. Unless new legislation extends the suspension, Section 217 will spring back to life in 2026, reinstating the deduction for all qualifying taxpayers. But for now, it’s off the table for civilians.

Employer Reimbursements as Taxable Income: On the flip side, there’s the question of whether a company’s payment of your moving costs counts as taxable income to you. Before 2018, there was a concept of “qualified moving expense reimbursement” defined in IRC Section 132(g). Section 132 is about fringe benefits, and part (g) allowed that if an employer reimbursed an employee for moving expenses that would have qualified as a deduction under Section 217, that reimbursement could be excluded from the employee’s income. In plain terms, if your move met the tax law requirements, your employer could pay for it (or reimburse you) and not report it as wages – it was a tax-free fringe benefit to you. This is why, prior to 2018, many employers paid moving companies directly or gave lump sums under an accountable plan (where you substantiate expenses) – it was free of tax for the employee if done right, and the employee therefore wouldn’t deduct those expenses (since they never counted as income or out-of-pocket cost).

The TCJA changed this too. It suspended the exclusion in Section 132(g) for 2018-2025 except for military. Now, any moving expense payment or reimbursement to an employee must be included in taxable wages (again, unless you’re active-duty military under orders). The IRS reiterated this in notices and updates: for example, starting in 2018, the IRS Form W-2 instructions say that only military moving reimbursements get special treatment (reported in box 12 with code P). All other employer-paid moving costs go on your W-2 as income. The IRS also issued Notice 2018-75 to clarify that if you moved in 2017 but your company paid the bills in early 2018, that could still be excluded (transition relief), but otherwise any new moves are fully taxable events for the employee.

IRS Publication 521 (titled Moving Expenses) provides official guidance for taxpayers. It outlines which moving costs qualify (when the deduction is available) and clearly states that you cannot deduct expenses that were reimbursed by your employer. Publication 521 was updated after the TCJA to inform readers that the deduction is mostly suspended. It emphasizes the exception for the Armed Forces and advises everyone else that Form 3903 should not be filed for post-2017 moves. In Pub 521, the IRS includes examples to drive home the point: if your employer pays the mover or gives you a check for your relocation, you can’t take a deduction for those same expenses. The publication essentially mirrors what the law says: no double benefit.

Key Court Rulings: Court cases have played a role in interpreting moving expense deductions. A historical case, Commissioner v. Mendel (4th Cir. 1965), occurred back when moving expenses were generally considered personal (non-deductible) unless specifically allowed. In that case, the Fourth Circuit Court of Appeals ruled that a taxpayer’s unreimbursed moving costs were personal expenses and not deductible under the law at that time. Interestingly, shortly after cases like this, Congress enacted Section 217 to explicitly allow moving expense deductions, changing the landscape in taxpayers’ favor (at least until the TCJA reversed course decades later).

Another illustrative case is Harris v. Commissioner of Revenue (Minnesota Supreme Court, 1977). This state-level case dealt with a Minnesota rule that denied the moving expense deduction for taxpayers leaving Minnesota for a job in another state. The taxpayer argued it was unconstitutional to deny that deduction, especially since federal law allowed it, but the court upheld Minnesota’s right to do so. This case highlights that states can indeed set their own tax deduction rules independently of the federal code – a principle that explains why states today can diverge on moving expenses.

More recently, a Tax Court bench opinion (in an unpublished decision) addressed an Air Force civilian employee who tried to claim moving expenses after being ordered to a new post. Because she was a civilian (not active-duty military), the Tax Court denied her deduction – confirming that even government civilian employees must adhere to the TCJA suspension. The logic was straightforward: Congress hadn’t carved out an exception for them, so the IRS and courts had to apply the law as written.

The Takeaway: From the tax code itself to IRS publications and court decisions, the legal consensus is clear. If your employer reimburses you, you can’t deduct those expenses. And if you’re a regular taxpayer (not military) in the years 2018-2025, you can’t deduct moving expenses at all on your federal return. The IRS enforcement of this is strict, as it’s black-letter law. Staying on the right side of these rules means understanding the interplay of code sections and being aware of any post-2017 developments.

Comparisons: Reimbursements vs. Deductions in Different Situations

To further clarify things, let’s compare some different scenarios side by side and examine how reimbursements and deductions stack up:

Reimbursement vs. No Reimbursement: Imagine two coworkers, Alice and Bob, who both moved for a job in 2022. Alice’s employer reimbursed her $10,000 in moving costs, while Bob’s employer offered no assistance, so Bob paid $10,000 himself. Under current tax law, neither Alice nor Bob can deduct moving expenses on their federal taxes, because of the TCJA suspension. However, Alice’s $10,000 reimbursement is taxable income to her (increasing her W-2 wages), whereas Bob has no reimbursement but also no deduction. Bob might feel like he’s worse off – he had to eat the full cost. Alice got her costs covered but had to pay, say, ~25% of that $10k in income tax, effectively leaving her with $7,500 of the benefit after tax. In the end, Alice still came out ahead financially (since $7.5k net is better than Bob’s $0 help), but she didn’t get to deduct anything either.

Accountable Plan vs. Taxable Reimbursement: Now consider the pre-2018 world. If an employer used an accountable plan for moving expenses, they’d reimburse only actual receipts and the employee had to return any excess advance. In that scenario (pre-TCJA), the reimbursement was not taxed and the employee didn’t deduct the expenses (no need, they weren’t out-of-pocket). This was a win-win: the employee wasn’t taxed and the IRS knew the expense was legit. Alternatively, if the employer just gave a flat moving bonus or didn’t follow an accountable plan, the amount was taxable to the employee – but then the employee could deduct their actual moving costs on Form 3903. Usually, the deduction would offset the income inclusion if the numbers matched. For example, if you got a $5,000 taxable moving allowance and you spent $5,000 moving, you’d include $5k in income but also deduct $5k, roughly canceling out for federal tax (subject to timing differences). That old system was more complicated but provided avenues to not be taxed on genuine moving costs one way or another. The TCJA simplified this by saying: we’re not doing any of that for now – it’s all taxable (again, except military).

State Conformity vs. Non-Conformity: It’s also useful to compare a state that follows federal law fully and one that doesn’t. Take Florida vs. California. Florida has no state income tax at all, so there’s nothing to deduct or worry about at the state level. California, on the other hand, has a state income tax and chose not to conform to the federal suspension of moving expenses. So a person moving to California can deduct moving expenses on their California return (subject to California’s rules) but not on their federal return. If that person got an employer reimbursement, California will not tax that reimbursement (provided it meets the qualified criteria), whereas the IRS will tax it. In effect, a move to California might yield a state tax break that a move to a non-deducting state (or a no-tax state) wouldn’t.

Consider also New York vs. Illinois. New York decoupled from the federal rule – it still allows moving expense deductions and excludes employer moving reimbursements from New York taxable income. Illinois, by contrast, conforms to federal law, meaning it offers no moving deduction either. So if you moved from Illinois to New York for work with a reimbursed move, on your New York part-year return you might get to deduct expenses or exclude the reimbursement for the New York portion of income, while Illinois taxed the reimbursement when you left. These comparisons can get a bit complex, but they underline the importance of checking each jurisdiction’s approach.

Military vs. Civilian: A comparison between a military move and a civilian move is striking. A U.S. Navy officer who relocates under orders will have their moving costs either covered by the government or be able to deduct them (if paid out-of-pocket). None of the reimbursement is taxed to them – it’s explicitly tax-free under both federal law and typically state law – and any personal spending on the move can be written off above-the-line. Meanwhile, a civilian employee of a company who relocates is not afforded any such break: if the company pays, it’s taxable income; if the employee pays, it’s nondeductible personal expense. This disparity was intentional under the TCJA, largely out of recognition that military moves are involuntary and serve the country’s needs, whereas civilian moves are viewed as personal career choices.

In summary, when comparing across different situations, one thing becomes clear: the TCJA created a much more uniform (if stricter) federal rule – almost everyone is treated the same (no deduction) except the military. But at the state level and in different contexts, there’s still variability. Always evaluate both your federal and state tax impact when you move, and whether any special category (like Armed Forces orders) applies to you.

Key Terms and Entities in Moving Expense Deductions

This topic touches on several important tax terms and entities. Understanding these will help clarify how the system works and who the players are:

Tax Cuts and Jobs Act (TCJA): A landmark federal tax reform law passed in late 2017, effective 2018. The TCJA is the reason moving expenses deductions vanished for most taxpayers. It was championed by Republicans in Congress and signed by President Trump. One goal was to simplify deductions – eliminating many, including moving expenses – in exchange for a higher standard deduction. TCJA provisions expire after 2025, so moving expense deductions are scheduled to return in 2026 unless Congress extends the ban.
IRS (Internal Revenue Service): The U.S. tax authority that enforces tax laws and provides guidance. The IRS issued new instructions after TCJA to ensure employers include moving reimbursements in W-2 income. It publishes IRS Publication 521 to guide taxpayers on moving expenses, and IRS Form 3903 which is used to calculate the moving expense deduction (when allowed). The IRS’s role is to administer the rules set by Congress – so when the law changed, the IRS updated forms and manuals accordingly.
Form 3903 (Moving Expenses): The tax form individuals use to claim a moving expense deduction. It’s a one-page form where you tally up your qualified moving costs (like transportation, packing, lodging) and subtract any reimbursements received from your employer. Before 2018, many people attached Form 3903 to their 1040 if they moved for work. Now, only active-duty military (or certain reservists, etc.) use it. Tax software will typically only generate Form 3903 if you indicate you’re military (or for some state returns that still use it). Form 3903 feeds into the Adjusted Gross Income section of the 1040 (above-the-line deduction).
Publication 521 (Moving Expenses): An IRS publication that explains in plain language which moving expenses are deductible and how to handle reimbursements. It defines key tests (distance test, time test), lists deductible vs. nondeductible expenses, and gives examples. Pub 521 also reminds taxpayers that any reimbursed amounts that were excluded from income can’t be deducted. For years 2018-2025, it notes the deduction is mostly suspended. This publication is essentially the “manual” for Form 3903 and is a go-to reference for tax preparers dealing with a client who moved.
Distance Test (50-Mile Rule): A condition from tax law for a move to be considered work-related and deductible (in times when deductions are allowed). It requires that your new job location must be at least 50 miles farther from your old home than your old job location was. For example, if you used to commute 10 miles, your new commute must be at least 60 miles for your move to pass this test. The idea is to ensure the move is a significant distance, not just a short hop. Active military are exempt from this test under current rules (they qualify regardless of distance).
Time Test (39-Week Rule): Another condition for deductibility of moving expenses (again, relevant when the deduction applies). If you’re an employee, you must work full-time for at least 39 weeks during the 12 months following your move in the general area of your new job. If self-employed, a stricter standard applies (39 weeks in first 12 months and 78 weeks within 24 months). This test ensures the move is connected to a longer-term employment, not just a brief stint. If you quit or get laid off too soon, technically the move might not qualify (there are exceptions for layoffs, etc.). Military moves are exempt from the time test as well.
Accountable Plan: This is an employer’s reimbursement arrangement that must meet IRS rules: the expenses reimbursed must be business-related, substantiated with receipts, and any advance not used must be returned. Under an accountable plan, reimbursements are not counted as income to the employee. Pre-2018, moving expense reimbursements could be handled under an accountable plan to remain non-taxable. Now, even if an employer uses an accountable plan for moving, the reimbursements (for non-military) are taxable due to the TCJA override. However, accountable plans still apply for other types of expenses (like business travel, etc.) – it’s just that moving is temporarily out of that loop for tax-free treatment.
Qualified Moving Expenses: This term refers to the specific types of costs that can be deducted (or that qualified for reimbursement exclusion). It includes things like the cost of packing and shipping household goods, movers or truck rental, travel costs like airfare or car mileage and lodging during the move, and storage for up to 30 days. It does not include meals, side trips, or any expenses associated with selling or buying a home. Understanding what “qualified” expenses are matters because even if you’re allowed to deduct or exclude moving costs (military or state context), it only applies to these qualifying expenses.
Fringe Benefit vs. Taxable Wage: Employer-provided moving expense payments used to be a tax-free fringe benefit (when qualified), which was a perk to employees. Now they are largely treated as taxable wage income. This shift means higher tax liability for employees receiving relocation packages and also imposes payroll tax obligations on those amounts. Many companies responded by offering gross-up (see below).
Gross-Up: A practice by employers who reimburse moving expenses to also provide additional compensation to cover the income taxes the employee will owe on that reimbursement, given that it is taxable. It’s essentially paying the employee’s tax so the employee isn’t out-of-pocket due to the tax. For example, if an employer promises to “gross-up” your $10,000 moving reimbursement, they might pay you an extra $3,000 or so, intending that after taxes you still net $10,000 for your move. Gross-ups became more common after 2018 because employers recognized that employees were getting stuck with tax on relocation benefits that used to be tax-free. It’s often a point of negotiation in relocation packages now.
Non-Conforming States: This refers to the states that did not conform to the federal changes on moving expenses. They either “static” conform to the Internal Revenue Code as of a date before the TCJA, or they passed laws to decouple from the specific moving expense provisions. These states include California, New York, Massachusetts, New Jersey, Pennsylvania, Arkansas, and Hawaii. In these places, the old moving expense rules may still apply at the state level. For instance, California’s Franchise Tax Board still allows the deduction and excludes qualified reimbursements from California taxable income. “Non-conforming” simply means their state tax code isn’t following the post-2017 federal rules in this area.
Franchise Tax Board (FTB) & State Tax Agencies: Entities like California’s FTB, New York State Department of Taxation and Finance, Massachusetts Department of Revenue, etc., are the state-level equivalents of the IRS. They enforce state tax laws. Some of these agencies issued guidance or adjusted state tax forms to clarify moving expenses. For example, New York’s tax department released bulletins explaining that, despite federal changes, New York still allows a moving expense deduction and instructing taxpayers how to claim it on state returns (often as an “adjustment” increasing federal AGI, since state starts with federal AGI and then subtracts the moving expenses).
Permanent Change of Station (PCS): A term used in military context meaning an official order for a service member to relocate to a new duty station. It’s relevant because having a PCS order is what qualifies active-duty military for the moving expense deduction and reimbursement exclusion. In practice, the military often directly handles much of the move (through programs like DITY moves or government-contracted movers), but any unreimbursed part of a PCS move can go on Form 3903. If you see “PCS orders,” know it’s tied to the one big exception left in the moving expense world.

By familiarizing yourself with these terms and entities, you gain a clearer picture of the “who, what, and why” behind the rules. For instance, knowing that TCJA is temporary and Section 217 is just on hiatus suggests that tax planning could change again in a few years. Or knowing that gross-up is a thing might encourage you to ask your employer to include it, since you can’t deduct anything yourself.

Federal vs. State Rules: A Tale of Two Tax Codes

One complicating factor in answering our main question is that federal and state tax rules can diverge. While we’ve established the federal stance (no deduction for most, reimbursements taxable), certain states handle moving expenses differently. This section breaks down the federal vs. state contrast and highlights which states have unique rules:

Federal Rules (Universally Applied):

Deduction Eliminated (2018-2025): Under federal law, no moving expense deductions are allowed on Form 1040 for tax years 2018 through 2025, except for active-duty military moves. This means the majority of taxpayers simply cannot deduct these costs, whether reimbursed or not.
Employer Reimbursement Taxable: Any moving expense reimbursement or direct payment by an employer is considered taxable income to the employee (again, unless it’s a qualified military move). Employers must include it in the employee’s wages on the W-2. There’s no special reporting code for civilian moving payments anymore; it’s just part of your salary for tax purposes.
Military Exception: Active-duty military under PCS orders can still deduct moving expenses (above-the-line) and exclude any qualified reimbursements (the military issues those often directly, and they show up as non-taxable, Code P on W-2). No one else gets this treatment at the federal level currently.
Return in 2026: If the law sunsets as written, moving expenses would once again become deductible for civilian moves starting in 2026, and employer reimbursements would revert to being non-taxable if they meet the rules. But that’s a big “if” – Congress could always change things before then.

State Rules (Varies by State):

States fall into a few categories when it comes to moving expenses:

Rolling Conformity States: These states automatically follow the current federal tax code. So when the TCJA suspended moving expense deductions, these states did too, unless they passed a specific law to decouple. For example, Illinois, Ohio, Georgia and many others simply mirror the federal treatment – no deduction allowed in 2018-2025 and reimbursements are taxable for state purposes as well.
Static Conformity States: These states tie their tax code to the federal code as of a specific date in the past. If that date is before 2018, the state might not have adopted the TCJA changes. For instance, California conformed to the Internal Revenue Code as of January 1, 2015 (for many provisions), meaning it did not pick up the TCJA’s elimination of the moving expense deduction. Thus, California kept the deduction on its books. Similarly, New York chose to specifically decouple from the moving expense provisions – effectively continuing to allow them.
Selective Conformity: Some states conform to some federal provisions but not others. New Jersey is a notable case. New Jersey normally doesn’t allow many itemized deductions at all (it has its own system), and it historically did not allow a moving expense deduction for its Gross Income Tax. However, it did allow an exclusion for employer moving reimbursements that meet the federal qualified definition. So in NJ today, you cannot deduct moving expenses you paid, but if your employer reimbursed you for a qualified move, you do not have to count that reimbursement as income on your NJ return (even though you do on your federal). That’s a bit of a twist: NJ gives a break only if your employer paid it.
States with Full Deduction Still: As of the early 2020s, around seven states continued to allow a moving expense deduction or income exclusion. These included:
- California – Allows deduction for qualified moving expenses on the state return; also excludes employer reimbursements from state income. Basically, California stuck with the pre-TCJA treatment.
- New York – Same as California: deduction allowed, and employer reimbursements excluded, as long as the move meets the distance and time criteria.
- Massachusetts – Massachusetts initially allowed the deduction for 2018-2021 on the state level while the feds did not. However, starting in 2022 Massachusetts aligned with federal rules (only military can deduct). Interestingly, MA law says that when the deduction is in effect, a taxpayer can only deduct moving expenses on the MA return if they were reimbursed and included in income or (for years after the TCJA conformity) if they’re military. Massachusetts will fully conform again in 2026 when the federal deduction comes back.
- Pennsylvania – Pennsylvania has its own tax rules and historically allowed moving expense deductions under certain conditions. PA tends to have a narrow scope of what it taxes as compensation. It currently still allows a deduction for moving expenses for a new job within Pennsylvania (but not if you move out of PA). So it’s somewhat scenario-specific.
- Arkansas – Did not adopt the federal change, so moving expenses remain deductible on Arkansas state returns.
- Hawaii – Also decoupled from many TCJA changes, meaning moving expenses can still be deducted on HI state taxes.
- New Jersey – As mentioned, no deduction but exclusion of reimbursements from income.

Let’s summarize a few major states in a quick reference table:

State	State Tax Treatment of Moving Expenses (2018-2025)
California	Allows deduction for qualified moving expenses on state return. Employer reimbursements for those expenses are not taxed by CA. (State did not conform to TCJA changes.)
New York	Allows moving expense deduction and excludes qualified employer moving reimbursements from income on NY return. (Decoupled from federal on this issue.)
Texas	N/A – Texas has no state income tax, so no deduction needed (and no state tax benefit available).
Illinois	Follows federal – no deduction allowed, and any moving reimbursement is just part of taxable income (IL conforms to post-TCJA code).
New Jersey	No deduction allowed. However, you can exclude employer reimbursements from NJ taxable income if they meet the criteria of qualified moving expenses (reimbursement is tax-free in NJ).
Massachusetts	For 2018-2021, allowed a state deduction (non-military could deduct in MA even though not federally). For 2022-2025, conformed to federal (deduction only for military). Will allow for all again in 2026 if federal law reverts. Employer reimbursements are excluded from MA income if a deduction is allowed.
Pennsylvania	Allows moving expense deduction only for moves into PA or within PA for a new job in PA. Does not allow it if you move out of PA. Qualified employer reimbursements for PA moves are excluded from PA taxable income.
Hawaii	Did not conform to TCJA; moving expenses still deductible on HI return for qualified moves.
Arkansas	Did not conform; moving expenses deductible on state return (with qualified expenses and criteria similar to old federal rules).

As you can see, the federal-state patchwork means the answer to “can I deduct moving expenses if my employer reimburses me?” could technically be “no federally, but maybe yes on your state taxes.” For example, an Los Angeles-bound employee who got a reimbursed move will pay federal tax on that reimbursement and get no federal deduction, but on their California return they will subtract the moving expense amount (deduct it) and also not count the reimbursement in California income. This can save a significant chunk at California’s high tax rates.

Tip: Always look at your W-2 in a moving year. Employers often put the amount of moving expense reimbursement in Box 1 (wages) for federal. Some will also put the amount in Box 16 for state wages except if your state doesn’t tax it – in which case state wages might be lower than federal. For instance, your W-2 might show $100k federal wages but $92k CA wages because $8k of moving expenses were removed. That’s a clue that your state is giving you a break. Regardless, you might still need to pro-actively claim the deduction on the state form.

In conclusion, federal rules are now straightforward (no deduction, reimbursements taxed), but state rules require a bit of homework. If you moved across state lines or to a state that has its own opinion about moving costs, make sure you follow the correct set of rules for each tax return you file.

Pros and Cons of Employer Reimbursements vs. Deductions

When facing relocation, you might wonder whether it’s better to get an employer to pay for your moving costs or to pay them yourself and (in a fantasy world where deductions existed) deduct them. Given today’s laws, let’s weigh the pros and cons of employer reimbursement versus out-of-pocket moving from a tax perspective and overall financial view:

Pros of Employer Reimbursement:

Less Out-of-Pocket Strain: The obvious benefit is that someone else is covering your moving expenses. Moving can easily cost thousands of dollars, and having your employer pay means you’re not draining your savings or going into debt for the move.
Possible Gross-Up Coverage: Many employers, especially larger companies, offer to gross-up the reimbursement. This means they provide additional funds to offset the taxes you’ll owe on the reimbursed amount. When grossed-up properly, you truly get your move paid for with little to no financial downside. For example, without a gross-up, a $10,000 reimbursement might net you $7,500 after tax. But with a gross-up, the employer might pay you ~$13,500 so that after, say, 25% tax, you still have $10k net.
No Need for Deductions/Paperwork: If your employer pays via an accountable arrangement (and even if not), you don’t need to worry about claiming a deduction or keeping track for tax purposes beyond normal reimbursement protocols. Before 2018, you might have been concerned about filing Form 3903 to deduct anything you paid. With reimbursements, especially under accountable plans, you had simpler taxes – often nothing to declare. Today, though the reimbursement is taxable, there’s no special form – it’s just wages. In a way, that simplifies your tax filing too (even if not in your favor financially).
Financial Cushion if Plans Change: If you pay out-of-pocket and your job situation changes or you fail the time test (in a scenario where deductions count), you could lose the deduction and be stuck with costs. But if the employer paid upfront, that risk is on them, not you.

Cons of Employer Reimbursement:

Taxable Income Hit: The downside since 2018 is clear – a reimbursed move will increase your taxable income for the year. This could push you into a higher tax bracket or reduce benefits tied to income (like income-based student loan repayments or tax credit phase-outs). You’re essentially paying tax on money that just passes through you to moving companies. Without a gross-up, you might owe a few thousand dollars in tax simply because your employer’s help is considered additional income.
No Federal Deduction: You can’t offset that income with a deduction for the expenses because the deduction doesn’t exist currently (and even if it did, you couldn’t deduct the reimbursed portion). So you’re fully exposed to tax on the reimbursement, whereas in pre-2018 times, you might zero it out via deduction or exclusion.
Potential to Cover Non-Qualified Expenses: Employers typically only reimburse costs that are directly moving-related (qualified expenses). If you have other costs (like breaking a lease, house-hunting trips, etc.), those often aren’t reimbursed and you can’t deduct them either. So even with a generous employer package, you might have some expenses that no one covers and no tax relief for them.
Less Flexibility in How You Move: When the company is paying, you might have to follow their rules – use their moving company, adhere to a budget, move by a certain date, etc. While this isn’t a tax con per se, it ties into the overall proposition of employer-paid moves. If you pay yourself, you have full control (but then you bear all costs).

Pros of Paying Yourself (Out-of-Pocket) Under Current Law:

None from a Federal Tax Perspective (for now): Because no deduction is available, paying yourself yields no federal tax benefit. In the past, a pro would have been “you can deduct it and possibly come out ahead if you’re in a high tax bracket.” But today, that’s off the table for most.
State Tax Deductions: The one potential advantage is if you’re in a state that allows moving expense deductions and you pay your own way, you’ll be able to claim that deduction on your state return. For instance, if you moved and spent $5,000 and you’re in New York, you’ll save maybe $250-$450 in NY state tax (depending on your bracket) by deducting it. That’s not nothing, but it’s also not huge. And it still means you spent $5,000 to save a few hundred.
No Increase in Taxable Income: Since you didn’t receive a reimbursement, your W-2 remains lower. If keeping your taxable income low is important (for, say, keeping under certain thresholds for other tax benefits), not having a reimbursement helps. However, note that paying $5,000 to save maybe $1,000 in tax (if the deduction were there) is still a net loss of $4,000. So this is only a “pro” in terms of optics of taxable income, not actual financial gain.

Cons of Paying Yourself:

Full Financial Burden: You absorb all the moving costs. Relocating can be expensive – truck rentals, movers, closing out a lease or selling a house, travel, temporary lodging – it adds up. Without an employer’s help, those costs come out of your pocket.
No Federal Tax Relief: As repeated, currently you get no federal deduction to lighten the load. In prior years, you at least got to reduce your taxable income by the moving expense amount (which could effectively subsidize, say, 20-30% of the cost via tax savings). Now, you get zero relief on your federal return for that spending (unless you’re military).
Limited State Relief: Only some states give you a deduction, and even then it’s just a fraction of your expense (equal to your state tax rate times the expense). So the financial con is you’re spending money with minimal kickback.
Risk of Uncertainty: If you moved expecting to stay employed and something changes, you have no recourse. For example, if you moved and didn’t end up staying at the job long (and if this were pre-2018, you could even lose the deduction if you failed the time test), you’re out the money with no one to help. At least with a reimbursement, that money was fronted to you.

In weighing these, for most individuals under current law, having the employer cover moving costs is still financially better despite the tax hit. The ideal scenario is negotiating a grossed-up relocation package, so the company also pays the taxes on the reimbursement. That way, you truly move at no personal cost. Many large corporations do this automatically now for relocations, precisely because they know employees can’t deduct the expenses themselves anymore. If your employer isn’t offering a gross-up, it’s worth asking – it could save you a lot.

If no employer help is available, see if any moving expenses can be covered under other tax-beneficial ways: e.g., sometimes signing bonuses or other allowances can be structured to indirectly help with a move. But since you can’t deduct, you might focus on simply minimizing costs.

Bottom Line: The pros of employer reimbursements generally outweigh the cons, especially if the company recognizes the tax implications and adjusts for them. The cons are mainly tax-related and can be mitigated by employer policy (gross-ups) or partially by state tax rules. Paying everything yourself leaves you with the bill and, at least until 2026, no federal tax silver lining.

FAQs: Quick Answers on Moving Expenses & Tax Deductions

Q: Can I deduct moving expenses on my 2023 federal tax return?
A: No. Unless you’re active-duty military moving on orders, you cannot deduct moving expenses on your federal return for 2023 due to the TCJA suspension.

Q: Are employer-paid moving expenses considered taxable income?
A: Yes. For most civilians, any moving expense payment from your employer is taxable and will be included in your W-2 wages. Only active-duty military move reimbursements remain tax-free.

Q: If my employer reimburses me for moving, can I deduct any of those expenses?
A: No. You cannot deduct expenses that your employer reimbursed. You didn’t actually pay those costs, so they’re not deductible (and after 2017, non-military moves have no deduction at all).

Q: What if my employer only covered some of my moving costs? Can I deduct the rest I paid?
A: No. The federal deduction is suspended, so even the portion you paid yourself isn’t deductible. (Some states still allow a deduction for unreimbursed moving costs on state returns.)

Q: Do I need to fill out Form 3903 for moving expenses?
A: No, not unless you’re active-duty military. Post-2017, Form 3903 is typically only used by military moves (or on state returns that still allow the deduction). Most people won’t file it.

Q: My employer paid the moving company directly. Is that still taxable to me?
A: Yes. A direct payment to the moving company is still considered a benefit to you and is taxable (unless it’s an active-duty military move). It will show up as income on your W-2.

Q: Do any states still allow moving expense deductions?
A: Yes. Some states (like California, New York, Pennsylvania, Hawaii, and Arkansas) still permit moving expense deductions or exclude employer reimbursements. Check your state’s rules, as they vary widely.

Q: I moved for a new job. Is there any tax benefit I can still get?
A: Not really. There’s no federal deduction now. Your best bet is negotiating a relocation package from your employer, or seeing if your state offers any moving expense deduction.

Q: Will the moving expense deduction ever come back?
A: Possibly. Under current law, it’s set to return in 2026 when the TCJA provision expires. Congress could extend the suspension or change the law again before then, so stay tuned.

Q: Are there any other tax breaks for moving costs?
A: No. There’s no alternate federal tax deduction or credit for personal moving expenses. Aside from military provisions, you’d have to rely on employer assistance or other non-tax methods to offset moving costs.