How Tax Reform Affects IRS Moving Deductions

Moving for work? You may want to brush up on the latest tax rules and regulations regarding moving expenses. Under the previous law, those moving for work could deduct the cost of movers, travel and other moving expenses from their federal income taxes. Now, thanks to tax reform, the majority of taxpayers will no longer be able to claim a deduction on moving expenses.

In 2023 the Tax Cuts and Jobs Act was signed into law, affecting both individuals and businesses. While the new law lowers tax rates for many, it also eliminates any tax-deductible moving expenses. According to the IRS, “in addition to lowering the tax rates, some of the changes in the law that affect you and your family include increasing the standard deduction, suspending personal exemptions, increasing the child tax credit, and limiting or discontinuing certain deductions.”

The majority of tax reform changes take effect in 2023 for tax returns filed in 2023. To get you up to speed with the ins and outs of the new tax law and how it affects those moving, read our guide to IRS moving deductions before and after tax reform, below.

**Allowable IRS moving deductions before tax reform**

Prior to the Tax Cuts and Jobs Act, taxpayers moving for a job were allowed to claim moving expense deductions on their taxes. The IRS allowed these moving deductions only when the person was moving for job-related reasons. The requirements for classifying it as a job-related move included:

The time requirement – The move had to be closely related to the start of work. This meant that taxpayers had to be working full-time at the new job for at least 39 weeks within the first year of moving.
The distance requirement – In order to prove that you were moving for work, the commute from the old home to the new job location had to be at least 50 miles longer than the old commute.

If you met the above requirements, you could deduct certain moving expenses from your federal income taxes. However, these expenses must have been necessary for your move. Examples included:

The cost of hiring professional movers and/or packers
The cost of renting a moving truck
The cost of moving supplies such as boxes
The cost of insuring belongings during a move
The cost of connecting and disconnecting utilities due to the move
The cost of moving your car
The cost of storing belongings for up to 30 consecutive days after the move
The cost of temporary lodging, often needed when moving for work
The cost of gasoline, oil, parking fees, tolls and other transportation expenses related to moving

Those moving were not allowed to deduct: the cost of buying or renting a new home; the cost of meals and food while on the road; the cost of house-hunting or pre-move visits; and any expenses that were already reimbursed by an employer. For more information on how IRS moving deductions worked prior to tax reform, check here.

IRS moving deductions are no longer allowed under the new tax law

Unfortunately for taxpayers, moving expenses are no longer tax-deductible when moving for work. According to the IRS, the moving expense deduction has been suspended, thanks to the new Tax Cuts and Jobs Act. In addition, the IRS states that “employers will include moving expense reimbursements as taxable income in the employees’ wages.” This is because the Tax Cuts and Jobs Act “suspends the former exclusion from income for qualified moving expense reimbursements from an employer.”

Members of the U.S. Armed Forces are an exception

While most taxpayers will lose these benefits, military personnel are an exception. The suspension of tax-deductible moving expenses “does not apply to members of the U.S. Armed Forces on active duty who move pursuant to a military order related to a permanent change of station as long as the expenses would qualify as a deduction if the government didn’t reimburse the expense,” according to the IRS.

So what does this mean for anyone moving in 2023 and beyond?

Unless you are an active member of the U.S. military, you will no longer be able to deduct your moving expenses from your federal income taxes.

Will my employer still reimburse me for moving expenses?

Whether you landed a new job or you’re being transferred to a new office location, be sure to ask your employer whether or not they plan to cover all or part of your moving expenses. Many companies offer relocation packages to employees in order to entice them to take the job. Be sure to speak with the company’s HR representative for more information on moving expense reimbursements.

Without tax deductions, how can I save money when moving?

Fortunately, there are other ways to save money when moving. Five ways to cut costs when moving include:

Finding free moving boxes – Search for free moving boxes at your local libraries, liquor stores, big box stores and recycling drop-off points.
Using Moving.com discounts – Find discounts on everything from plastic wrap to cardboard boxes at com’s online box center. We’ve partnered with UBoxes.com and UsedCardboardBoxes.com to help you purchase all of the necessary moving boxes and supplies at the best prices possible.
Moving yourself instead of hiring professionals – Unfortunately, professional movers aren’t cheap. To save money on your next move, we recommend moving yourself with either a truck rental or a moving container. Enlist friends and family to help with the packing as well as the loading/unloading of the moving truck.
Choosing a less expensive move date – If you can avoid moving during peak moving season and/or on a weekend when demand is highest, we recommend doing so. By moving during the late fall and winter months, you’re sure to save money on truck rentals and professional movers. Demand is also lowest during the mid-week and mid-month days, so you can expect costs to be lower as well.
Donating or selling items before moving – the more stuff you have to move, the more expensive your move will be. With this in mind, it’s important to get rid of all unnecessary items prior to moving. From donating old clothes to selling unused electronics, eliminating clutter will cut down on the number of hours (and therefore, money!) it takes to move.

For more information on how to cut costs when moving to a new home, check here.

Moving soon?

Given that moving expenses are no longer tax-deductible, you may want to think about other ways to save money during a move. Fortunately, our extensive network of reputable and reliable movers makes it easy to find and book a moving company that fits your budget needs. All relocation companies in our network are licensed and insured, so you can rest assured that your move will be in good hands. Best of luck and happy moving!