Can You Claim Moving Expenses on Taxes?
Uncover the narrow scope of moving expense tax deductions. Learn who qualifies and what expenses are eligible under current tax laws.
The ability to deduct moving expenses on federal income taxes has undergone significant changes in recent years. While these deductions were once broadly available, the rules have been substantially narrowed. This tax benefit is now limited to a very specific group of individuals. This article will clarify the current, more restricted scope of the moving expense deduction.
Eligibility for Moving Expense Deduction
For tax years 2018 through 2025, the deduction for moving expenses is suspended for most taxpayers due to the Tax Cuts and Jobs Act of 2017. This means individuals generally cannot deduct their moving costs on their federal tax return. This legislative change significantly altered prior provisions.
The sole exception to this suspension applies to members of the U.S. Armed Forces on active duty. These individuals may deduct unreimbursed moving expenses if their move is due to a permanent change of station (PCS) ordered by the military.
A permanent change of station for military members includes several scenarios. It covers a move from one’s home to the first active duty post, a move between permanent duty stations, or a move from the last duty station to a home of record or a closer point in the United States. This definition also encompasses moves related to separation or retirement from military service, provided they occur within one year of ending active duty or within the period allowed by Joint Travel Regulations. The move must be the result of a military order, and eligible expenses can include those for the service member, their spouse, and dependents.
Qualifying Moving Expenses
For eligible military members, specific types of expenses can be deducted, provided they are reasonable and directly related to the permanent change of station. These deductible costs primarily fall into categories covering transportation, household goods, and certain utility-related expenses. Only unreimbursed expenses can be claimed.
One primary category includes transportation and lodging costs for the taxpayer and household members during the move. This covers expenses such as airfare, vehicle mileage, and related tolls and parking fees. The standard mileage rate for moving expenses can be used for vehicle travel, which for 2025 is 21 cents per mile. Expenses for meals consumed during the move are specifically not deductible.
Another area of deductible expenses involves shipping and storage of household goods and personal effects. This includes amounts paid for packing, crating, and moving items, as well as temporary storage fees for up to 30 consecutive days after items are moved from the old home but before delivery to the new one. Costs associated with shipping personal vehicles or transporting pets can also be included. Additionally, expenses for connecting and disconnecting utilities at the old and new homes may also qualify.
Non-deductible costs for eligible military members include house-hunting trips, temporary living expenses beyond initial travel lodging, and costs related to buying or selling a home, such as real estate commissions or mortgage fees. Expenses for vehicle registration or driver’s licenses are also not deductible. Maintaining detailed records, including receipts and logs, for all claimed expenses is highly recommended to substantiate the deduction.
Calculating and Reporting Deductions
Eligible military members calculate their total deductible unreimbursed moving expenses and report them on their federal income tax return. This process requires specific IRS forms to ensure proper reporting. The IRS limits deductible moving expenses to what is considered reasonable for the circumstances of the move.
Taxpayers use IRS Form 3903 to figure their moving expense deduction. This form is designed for members of the Armed Forces on active duty who move due to a military order and permanent change of station. Form 3903 can be obtained from the IRS website or through tax preparation software.
When completing Form 3903, taxpayers enter amounts paid for shipping and storage of household goods and personal effects on line 1. Travel and lodging expenses incurred during the move are entered on line 2. The form guides the taxpayer through the calculation of the total deductible amount. The calculated deduction from Form 3903 is then transferred to Schedule 1, line 14. Reporting it on Schedule 1 means it is an “above-the-line” deduction, which reduces a taxpayer’s Adjusted Gross Income (AGI).
Special considerations apply if military members receive government reimbursements for their moving expenses. If the government pays for or directly reimburses expenses excluded from the service member’s income, those specific expenses cannot be deducted. However, if a reimbursement is included in the service member’s taxable income (e.g., in Box 1 of Form W-2), the corresponding expenses may still be deductible. If a service member has multiple qualifying moves within a tax year, a separate Form 3903 should be used for each move.