Are Moving Expenses Tax Free Under the New Tax Law?

Starting January 1, 2018, through December 31, 2025, job-related moving expenses are no longer tax-free.

The newly enacted Tax Cuts and Jobs Act (TCJA) makes many significant changes to employee benefits, including changes to the treatment of job-related moving expenses. Prior to the enactment of TCJA,  the cost of moving an employee, their family, and belongings was excluded from the employee’s income. IRC §132(g) allowed an exclusion from wages for moving expenses reimbursed or paid directly by the employer to the extent those moving expenses were deductible under IRC §217. Under IRC §217, the exclusion applied to the cost of moving household goods and personal effects from the former residence to the new, the first 30 days of storage for a domestic move, and lodging and mileage expenses incurred during the period of travel from the former residence to the new place of residence.

Under TCJA, reimbursements for moving expenses made to employees or paid directly to third parties on and after January 1, 2018, and through December 31, 2025, will be taxable income to the employee for federal income tax, Social Security and Medicare taxes, and federal unemployment. An exception to this provision applies to members of the Armed Forces on active duty moving pursuant to a military order and incident to a permanent change of station. TCJA §11048.