What Are Moving Expenses?
Moving expenses are potentially tax-deductible expenses that are incurred when an individual and their family relocate for a new job or due to the location transfer of an existing job. After certain baseline criteria are met for time and distance, individuals used to be able to deduct qualifying moving expenses for roughly one year after beginning the new job.
However, the Tax Cuts and Jobs Act of 2017 (TCJA) eliminated this deduction for tax years 2018 through 2025, except for members of the military on active duty who move as the result of a military order. For members of the military who still qualify, we discuss below how the tax deduction for moving expenses works.
- The Tax Cuts and Jobs Act of 2017 (TCJA) eliminated the moving expense deductions for most taxpayers.
- For tax years starting after 2017 and through 2025, only active-duty members of the United States Armed Forces can deduct moving expenses incurred due to a military order.
- To claim the cost of their moving expenses as federal income tax deductions, members of the Armed Forces can use IRS Form 3903.
- Within certain limitations, you can claim deductions for moving, storage, insurance, and travel expenses.
Understanding Moving Expenses
In the United States, for tax years starting after 2017 and through 2025, only active-duty members of the Armed Forces can deduct moving expenses incurred due to a military order that requires a permanent change of station. A permanent change of station includes one of three scenarios: 1) a move from your home to your first post of active duty, 2) a move from one permanent post to another, or 3) a move from the last active duty post to your home that occurs within one year of ending active duty or as allowed under joint travel regulations.
Qualifications for Moving Expenses
Members of the Armed Forces should use IRS Form 3903 to claim the cost of moving expenses as a deduction on their federal income taxes. When trying to determine if your moving expenses qualify as tax-deductible, the key phrase to consider—at least in the eyes of the Internal Revenue Service (IRS)—is "reasonable costs" for moving yourself and your property.
Basic categories of qualifying costs include moving expenses, storage expenses, and travel expenses.
You can deduct certain expenses associated with moving your household goods and personal effects. Examples of these expenses include the cost of packing, crating, hauling a trailer, in-transit storage, and insurance. Note that you cannot deduct expenses for moving furniture or other goods you purchased on the way from your old home to your new one.
You can deduct costs related to transporting, storing, and insuring your household goods and personal effects. These expenses must occur within any period of 30 consecutive days after your belongings were moved from your former home and before they were delivered to your new one.
Within certain limitations, you can deduct travel expenses from your old home to your new one. You can't deduct the cost of meals. You can deduct lodging expenses (with limitations), car expenses, and airfare.
If you use your car to take yourself, household members, or your household goods to your new home, you can calculate your expenses by deducting either of the following:
- Your actual expenses—such as the amount you pay for gas and oil for your car—as long as you keep accurate documentation of each expense.
- Or, the standard mileage rate of 20 cents a mile as of 2019.
Whichever method you use to figure your expenses, you can deduct the parking fees and tolls you pay to move. You can't deduct the costs of repairs, maintenance, insurance, or depreciation for your car. People wishing to claim these deductions should keep good documentation of all potentially qualified expenses.
If the government provides and pays for any of your moving or storage expenses, you should not claim these expenses as a deduction on your taxes.
Nondeductible Moving Expenses
Some expenses that are generally not deductible include house-hunting trips, expenses of entering into or breaking a lease, and the costs involved in buying or selling a home. While traveling from your old home to your new home, you cannot deduct the cost of what the IRS deems as extravagant lodging or unnecessary side trips. You can consult the instructions for IRS Form 3903 for details on nondeductible expenses.
Additionally, if you paid for moving expenses and were later reimbursed by the government, you will not be able to claim these costs as a deduction on your taxes.