What Is Moving Expense Reimbursement?

Let’s start with the basics. Moving expense reimbursement is money your employer gives you to help cover the cost of moving for a new job or work assignment. This can include things like hiring movers, renting a truck, or shipping your belongings. Sometimes, companies pay these costs directly to movers or landlords. Other times, they pay you back after you submit receipts, or just give you a set amount up front.

It sounds simple, but understanding the tax rules is important so you don’t end up with a surprise bill later. Why does it matter? Because whether you owe tax on this money depends on a few details, including when you moved, why you moved, and what kind of job you have.

Current Tax Law: When Is Moving Expense Reimbursement Taxable?

Since 2018, the rules around moving expense reimbursement changed a lot. The Tax Cuts and Jobs Act (TCJA) made most employer-paid moving expenses taxable for employees. This means if your employer gives you money or pays vendors directly for your move, you usually have to report it as income on your tax return.

Here’s the simple version: unless you’re an active-duty member of the U.S. Armed Forces moving because of a military order, moving expense reimbursement is considered taxable income. This means you’ll see the amount your employer paid (or reimbursed) for moving listed on your W-2 form as part of your wages. You’ll pay federal income tax on it, and likely Social Security and Medicare tax, too.

State tax rules can vary, but most states follow the federal model. If you live in a state with income tax, your moving reimbursement will usually be taxed there too. However, a handful of states have their own rules, so it’s always smart to check your state’s tax website or talk to a tax professional if you’re unsure.

The only big exception is for active-duty military members who move under a military order. For everyone else, moving reimbursements are taxable until at least 2025, unless Congress changes the law again.

What Counts as Taxable Moving Expenses?

Not every payment related to moving is treated the same way. Here’s how different types of moving reimbursements are handled:

  1. If your employer pays moving expenses directly to a moving company or landlord, the amount paid is typically added to your taxable income. For example, if your employer pays a moving company $3,000 to move you, you’ll likely see $3,000 added to your W-2.
  2. If your employer gives you a lump sum to cover any moving costs, the entire amount is generally taxable. Let’s say you get a $5,000 moving bonus. Even if you only spend $4,000 on the move, the full $5,000 is taxable.
  3. If you’re reimbursed only after submitting receipts, those amounts also count as taxable income. So if you turn in $2,500 worth of receipts and the company pays you back, you’ll pay tax on that $2,500.

Some companies “gross up” your reimbursement. That means they give you extra money to help cover the taxes you’ll owe on the reimbursement itself. For instance, if you’re in a 22% tax bracket and your moving costs are $6,000, they might pay you around $7,700 so you can cover both the move and the extra taxes. But even that extra payment is taxable, so you might still owe something depending on your tax rate.

It’s important to remember that company perks like temporary housing, storage costs, or travel for house-hunting are also taxable if your employer covers them. Even if these payments don’t go directly into your bank account, the IRS still treats them as income.

Exceptions: When Moving Expense Reimbursement Is Not Taxable

There are a few situations where moving expense reimbursement is not taxable. The main exception is for members of the U.S. military who move due to a military order. If that’s you, your reimbursement is not considered taxable income. You don’t have to include it on your tax return, and you won’t pay federal tax on that amount.

Before 2018, more people could exclude moving expenses from taxable income, as long as the move was related to starting a new job and met certain distance and time requirements. For example, if you moved at least 50 miles farther from your old home for a new job and worked full-time for a certain period, you could deduct or exclude moving expenses. However, the TCJA suspended these rules for most workers through at least 2025. Unless Congress changes the law, only active-duty military members still qualify for the tax break.

A few states, such as California, still allow some deductions for moving expenses on state returns, even if the federal rules don’t. So it’s worth checking your state’s tax website or asking a professional if you recently moved for work.

How to Report Moving Expense Reimbursement on Your Taxes

If your moving expense reimbursement is taxable, your employer will include it on your W-2 form in Box 1 (wages, tips, other compensation). You’ll need to report the full amount when you file your income taxes. This is true whether your employer paid the moving company directly, reimbursed you after receipts, or gave you a lump sum.

Let’s say you got a $4,000 lump sum for moving, and your salary is $60,000. Your W-2 will show $64,000 in Box 1, and you’ll pay tax on the total amount.

Don’t try to claim a deduction for moving expenses if you don’t qualify. The deduction is no longer available for most people. If you’re military and eligible for the exclusion, you’ll use IRS Form 3903 to report your moving expenses and claim the deduction. This form helps you figure out which expenses qualify and how much you can subtract from your income.

For everyone else, just make sure you include the full reimbursement amount in your gross income. If you’re unsure, check your W-2 or ask your HR department for details. It’s a good idea to keep all your moving receipts and paperwork, even if you’re not claiming a deduction. Sometimes employers need these for their records, and you’ll want to double-check your W-2 for accuracy at tax time.

Common Questions About Taxable Moving Expenses

Can I Deduct Moving Expenses on My Tax Return?

Unless you’re an active-duty member of the Armed Forces moving due to a military order, you cannot deduct moving expenses on your federal tax return. The deduction is suspended for everyone else through at least 2025. If you’re unsure about your eligibility, check the latest IRS moving expense guidelines.

Will My State Tax Moving Expense Reimbursements?

Most states follow the federal rule, so if your moving reimbursement is taxable for federal purposes, it’s usually taxable for state income tax too. Some states, like California, may have their own rules and allow limited deductions, especially if you moved for work. To be sure, check your state’s tax agency website or ask a local tax expert.