How Section 82 Affects Moving Expense Reimbursements

Under Section 82 of the Internal Revenue Code, any payment or reimbursement for moving expenses from an employer must be included in an employee’s gross income. Before the Tax Cuts and Jobs Act (TCJA) of 2017, employees could deduct these expenses to offset the income. The TCJA suspended the moving expense deduction for most taxpayers, so employer-paid moving expenses are now taxable income without a corresponding deduction.

These TCJA rules are temporary and scheduled to expire at the end of 2025. Unless Congress extends them, the moving expense deduction is expected to be reinstated for the 2026 tax year. An exception to the suspension exists for active-duty military members whose moves are part of a permanent change of station.

Defining Taxable Moving Expense Reimbursements

Because the moving expense deduction is suspended for most individuals, any reimbursement you receive from your employer is considered taxable income. This applies whether your employer gives you a direct payment to cover costs or pays a third party, like a moving company, on your behalf.

For example, if your employer gives you a $5,000 lump sum to cover your moving costs, that entire amount is taxable income. Similarly, if your employer pays a moving company $5,000 directly to transport your belongings, that amount is also considered taxable income to you.

Reporting Reimbursements on Your Tax Return

When you receive a moving expense reimbursement from your employer, it will be included in your wages in Box 1 of your Form W-2. This means the reimbursement is treated as part of your regular income and is subject to federal income tax, Social Security, and Medicare taxes.

Because the reimbursement is included in Box 1 of your W-2, it automatically flows into the gross income calculation on your Form 1040. You do not need to take any special steps to report the reimbursement on your tax return. However, it is important to review your W-2 carefully to ensure the amount of the reimbursement is correctly reported.

Special Rule for Members of the Armed Forces

While the TCJA suspended the moving expense deduction for most taxpayers, a special rule applies to active-duty members of the Armed Forces. If you are a member of the Armed Forces on active duty and you move due to a permanent change of station, you can still deduct your unreimbursed moving expenses. This means that if your moving costs exceed the reimbursement you receive from the government, you can deduct the difference on your tax return.

To deduct your unreimbursed moving expenses, you will need to file Form 3903, Moving Expenses, with your tax return. On this form, you will report your total moving expenses and the amount of any reimbursement you received from the government. A permanent change of station includes a move from your home to your first post of active duty, a move from one permanent post of duty to another, and a move from your last post of duty to your home or a nearer point in the United States.