What Moving Expenses Are Tax Deductible?

Understanding Current Tax Law

Changes to tax legislation have significantly altered the deductibility of moving expenses for most individual taxpayers. The Tax Cuts and Jobs Act (TCJA) of 2017 suspended the deduction for moving expenses for federal income tax purposes for tax years 2018 through 2025. This means that, for the vast majority of people, costs associated with a personal or work-related move are no longer eligible for a federal tax deduction.

Despite these changes, many individuals may still seek information on moving expense deductions due to historical tax laws or variations in state tax codes. However, the current federal landscape is much more restrictive, with only one specific exception remaining.

The sole federal exception to this suspension applies to qualified members of the U.S. Armed Forces. These individuals may still deduct certain unreimbursed moving expenses if their move is due to a permanent change of station (PCS) under military orders.

While some individual states may still permit deductions for moving expenses on their state income tax returns, this article focuses exclusively on federal tax law. Therefore, it is important for taxpayers to consult their state’s specific tax regulations if they believe they may qualify for a deduction at the state level. The federal rules, as outlined, are now highly specific to military personnel.

Deductible Expenses for Qualified Military Moves

For qualified members of the U.S. Armed Forces, a permanent change of station (PCS) under official military orders allows for the deduction of moving expenses. Such moves often involve relocation from one duty station to another, or from their last duty station to their home of record upon retirement or separation from service.

For these qualified military personnel, specific types of expenses incurred during the move are considered deductible. One category includes the costs associated with moving household goods and personal effects. This encompasses expenses paid to professional moving companies, the purchase of packing materials, crating services, and even the cost of in-transit storage for up to 30 consecutive days between the old and new residences.

Another deductible expense type covers travel costs for the service member and their household members from the old home to the new one. This includes the expense of transportation, such as fuel, oil, tolls, and parking fees if driving a personal vehicle. If traveling by plane, train, or bus, the cost of tickets is also deductible.

Additionally, the reasonable cost of lodging incurred while en route to the new duty station is a deductible expense. This covers hotel or motel stays during the journey itself, but it does not include meals.

For military moves, the standard distance and time tests that applied to civilian moves before the TCJA are generally considered met.

Expenses Not Eligible for Deduction

Even for those who qualify to deduct moving expenses, such as active duty military personnel, certain costs associated with a relocation remain non-deductible under federal tax law. Understanding these exclusions helps prevent misinterpretations and ensures accurate tax reporting. Many expenses that were once deductible for the general public prior to the TCJA are now universally non-deductible.

For example, the cost of meals purchased during a move, whether for the taxpayer or their family members, is not deductible. Similarly, expenses related to house-hunting trips, which involve traveling to the new location to find a residence before the actual move, are not eligible for a deduction. These are considered personal expenses rather than direct costs of transporting household goods or individuals.

Temporary living expenses incurred while waiting to move into a permanent home are also not deductible. This includes the costs of hotels or short-term rentals at the new location before the new residence is ready for occupancy. Other common non-deductible items include real estate commissions, mortgage points, or other closing costs associated with buying or selling a home.

Furthermore, expenses for breaking a lease on a former residence, new utility connection charges, or fees for car registration and driver’s licenses in the new state are not deductible. These are considered personal costs or indirect expenses of relocation rather than direct moving expenses. Knowing these limitations helps individuals understand the precise scope of what can be claimed.

Reporting Qualified Moving Expenses

For qualified members of the U.S. Armed Forces, reporting deductible moving expenses involves a specific process to ensure proper claim on federal income tax returns. These expenses are reported on Form 3903, titled “Moving Expenses.” The information from this form is then transferred to Schedule 1 (Form 1040), “Additional Income and Adjustments to Income,” as an adjustment to gross income.

Maintaining accurate and thorough records is paramount when claiming this deduction. Taxpayers should retain all receipts for expenses incurred, such as payments to moving companies, fuel purchases, and lodging receipts while en route. For vehicle travel, detailed records of mileage driven specifically for the move are also necessary to calculate transportation costs.

Crucially, documentation of the permanent change of station (PCS) orders from the military is required to substantiate the eligibility for the deduction. Proper record-keeping supports the claimed deduction in the event of an IRS inquiry.

These calculated amounts are then carried over to Schedule 1, where they reduce the taxpayer’s adjusted gross income. This reduction can subsequently lower the overall tax liability, providing a benefit for qualifying military personnel.