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Which Moving Expenses Are Deductible?

For most people, the federal moving expense deduction is currently suspended, with one significant exception. Here's who still qualifies and how the rules work for those who do.

The current rules

Under the Tax Cuts and Jobs Act of 2017, the federal moving expense deduction was suspended for tax years 2018 through 2025 for most taxpayers. The one exception is active-duty members of the armed forces who move pursuant to a military order and a permanent change of station; they can still deduct qualifying moving costs. Everyone else should treat the rules below as informational, since they generally apply only to tax years before 2018 or to military moves specifically. If you're unsure whether your situation qualifies, it's worth a direct conversation with your tax advisor before assuming either way.

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Qualifying for the deduction

For those who do qualify (military moves, or historical returns for pre-2018 years), the deduction covers reasonable costs of moving household goods and personal effects, plus travel, including lodging but not meals, to the new home. Moving expenses are claimed as an adjustment to income rather than an itemized deduction, and any portion reimbursed by an employer and excluded from your taxable income cannot also be deducted.

Three tests generally apply outside the military exception: the move must closely relate to the start of work, generally within one year of reporting to the new job; the "distance test" requires the new workplace to be at least 50 miles farther from your old home than your old workplace was; and the "time test" requires working full-time for at least 39 weeks in the first 12 months at the new location (or 39 weeks in 12 months plus 78 weeks in 24 months for the self-employed). Members of the armed forces moving under military orders are exempt from both the distance and time tests.

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What counts as a reasonable expense

Only reasonable costs qualify, meaning travel by the shortest, most direct practical route; a scenic detour along the way doesn't count. You cannot deduct any part of a new home's purchase price, closing costs, or the cost of breaking or entering into a lease. And if your employer later reimburses expenses you already deducted, that reimbursement may need to be included as taxable income.

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Travel by car

If you drive your own car as part of the move, you can generally choose between deducting actual expenses, such as gas and oil, with accurate records, or using a standard per-mile rate set annually by the IRS. Under either method, parking fees and tolls are separately deductible, but routine repairs, maintenance, insurance, and depreciation are not.

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Members of your household

You can deduct qualifying moving costs for yourself and for members of your household, meaning anyone who shared both your old home and your new one. This generally excludes a tenant or employee unless you can claim that person as a dependent.

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Moves within or to the United States

For a qualifying domestic move, deductible costs include packing, crating, and transporting household goods and personal effects; up to 30 consecutive days of storage and insurance for those items between moving out and moving in; utility connection and disconnection costs tied to the move; and shipping costs for a car or pets. If you move belongings from somewhere other than your former home, the deduction is capped at what it would have cost to ship them from your actual former home. Travel costs for you and household members, including lodging but not meals, are deductible for one trip to the new home, though the household doesn't need to travel together.

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Moves outside the United States

U.S. citizens or resident aliens relocating for work outside the country may, if otherwise qualifying, deduct reasonable storage costs for personal effects while the new location remains the main job site. One added wrinkle: if you claim the foreign earned income or foreign housing exclusions, you cannot also deduct the portion of moving expenses allocable to that excluded income.

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Frequently asked questions

Can I still deduct moving expenses on my federal tax return?

Only if you're an active-duty member of the armed forces moving under military orders and a permanent change of station. The deduction is suspended for most other taxpayers for tax years 2018 through 2025.

Does my state still allow a moving expense deduction even though the federal deduction is suspended?

It depends on your state; some states decoupled from the federal suspension and still allow a moving expense deduction on the state return. Check with a tax professional familiar with your state's rules.

If my employer reimburses my moving costs, is that reimbursement taxable?

It depends on how the reimbursement is structured and whether you're in a category still eligible to deduct moving expenses. This is worth reviewing with a tax advisor given how narrow the current deduction has become.

This guide is for general informational purposes only and is not tax, legal, financial, or investment advice. Every business situation is different, so consult a licensed professional before making decisions based on this content.