Based on the tax reform, the moving deduction was suspended until 2026. Presently, only active-duty members of the military and their households that move in response to order can claim the deduction.
In addition, before the tax reform, one might be allowed to exclude gross income from the reimbursement from your new boss to take care of moving costs. However, tax reform paused such exclusion for everyone except active military members who qualify.
This article will explore the status of the moving expense deduction alongside alternatives to take care of the moving cost.
Status of the Moving Expenses
Before 2018, when you move for a new job, there is a possibility of earning an above-the-line moving expenses deduction which will bring down taxable income by what the move cost you. Even though one needs to fulfill some conditions to qualify, itemizing isn’t necessary to claim it.
You, however, will not get this deduction except you are an active military member moving into your new home due to military relocation.
The inability to take these deductions implies that you will not reduce your tax bill for moving expenses. On the other hand, your tax bill will rise if your new boss gives you money to take care of the movement to your new job location.
Can you still have any moving expense deduction?
Military service members who must relocate compulsorily due to military orders can deduct moving costs on their federal tax return. However, many people do not qualify for this deduction.
The Tax Cuts and Jobs Acts eliminated or paused many things on the itemized deduction list, alongside the moving expense deduction. As a result, one can only take a few deductions now.
Moving Expense Deduction in Some States
Even though the tax deduction for moving expenses has been suspended at the federal level, taxpayers in some states might be lucky enough to claim a deduction on their tax returns.
Massachusetts is one of the states where you can deduct moving expenses. This can be traced to the failure of Massachusetts to implement personal tax law changes present in the internal revenue Code.
Your ability to deduct moving expenses from your state is a factor of the tax laws of your place of abode. In other words, it depends on how the tax laws of your state update in response to any changes from the federal tax laws.
Some states might decide they need a new law to adjust the default rules to either support or oppose moving expense deduction.
Possibility of the Deduction Returning
Presently, there is a possibility that the moving expense deduction and reimbursement exclusion will return in Jan 2026, unless congress decides to make the change permanent.
Since the moving expense deduction disappeared, one has no other option but to save for the cost involved in the relocation. These tips will help:
Do most of the move yourself: you can reduce the moving cost by simply packing yourself, loading and unloading yourself, renting a truck, etc. Hiring help should strictly be about things you cannot do yourself.
Shop around and compare their prices: take a series of written quotes from several moving companies if you want to hire. Ensure the movers visit your home and see the things involved before giving you an estimate
Get free boxes from your local stores: there is a high probability of getting free boxes by requesting from the nearest grocery store or gas stores.
Move at a low-demand time – there are times you might pay more for moving, especially when lots of people are moving. However, you can schedule your move to the middle of the month, weekday, or early in the morning.
Try and get help from your friends because it can also help you avoid the cost of hiring a professional.
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