Moving is an extensive process that requires diligent planning.

Before 2018, most taxpayers, including non-military personnel, could write off moving expenses, minimizing the financial burden to quite an extent.

However, after the new law, the rules have changed, and people who relocate locally or out of state face one question:

Are moving expenses tax-deductible anymore?

For most taxpayers, the answer is no; moving expenses are not deductible until 2025.

According to IRS moving guidelines, taxpayers can no longer claim moving expenses as a tax deduction unless they are active-duty military members with orders for a permanent change of station.

The 2017 Tax Cuts and Jobs Act temporarily extended the rules for moving expense deductions from 2018 until 2025.

Although these tax changes are temporary, no further announcement has been made about the expiration of the TCJA’s moving expense deduction. 

Let’s examine the details to help you understand the rules, what to expect regarding IRS moving expenses, and how to navigate these changes.

The Tax Cuts and Jobs Act (TCJA): Why Moving Expenses Are No Longer Deductible 

Up until 2017, moving expenses were deductible. However, the Tax Cuts and Jobs Act (TCJA), or as the media calls it, the Trump Tax Cuts, changed the rule for taxpayers. 

Starting in 2018 and extending through 2025, most taxpayers are no longer eligible to deduct moving expenses on their federal tax returns.  

However, this change didn’t affect a few people. Active-duty military members were exempt from this new policy. 

Are Moving Expenses Tax Deductible if I am an Active-Duty Servant?

Knowing who qualifies for moving expense deductions is essential before you file your taxes, particularly if you are a member of the armed forces.

Active-duty service members who have authorized PCS relocations or other military orders can claim relocation fee tax deductions.

These include moving by themselves, with their families, and their household goods to a new destination. 

Are Moving Expenses Tax Deductible if I am a Non-Military Taxpayer?

For the remainder of Americans, the moving expense tax deduction is not applicable until 2025.

However, this change didn’t affect a few states. Moving expense reimbursements are still applicable in New York State. 

Therefore, it is highly recommended that you consult with a certified CPA who can help you determine state laws. 

What are the Time and Distance Rules for Moving Expense Tax Deductions? 

Moving to a new city in the U.S. can be for several reasons, whether you are relocating for a change of scenery or moving for work.

In order to claim your relocation costs when going for a new job, you need to abide by the time and distance rules for tax deductions, especially if you are a non-military taxpayer, which are:

  • Your new place of employment must be at least 50 miles farther from your old home.
  • You must work full-time at your new location for at least 39 weeks within the first 12 months.

There’s an exception if you move before your other family member due to certain circumstances.

In such cases, you will still be eligible to deduct moving expenses from your taxes.  

What are “Reasonable” Moving Expenses Deductible?

As per the IRS moving tax guidelines, you can’t claim just any moving costs.

Reasonable expenses are the ones that took place at the time of your move, such as:

  • Travel expenses during long-distance moves, such as meals, lodging, and vehicle costs to move your staff and members.
  • Reimbursement of relocation expenses during the initial 15 days of your moving day, such as meals and temporary accommodation near your previous or new location place.
  • Other practical expenses include utility installation and disconnections, as well as legal costs associated with changing addresses. 

What Type of Moving Expenses Are Not Deductible?

Even qualified taxpayers are not eligible for deducting moving expenses if the spending includes: 

  • Renovation expenses for your new home or costs included for any changes made to the old home. 
  • Losses from selling the previous home. 
  • Move-out cleaning expenses to meet lease agreements. 
  • Costs of mortgage default insurance 
  • Expenses you bear while disposing of your old furniture items while moving
  • Installation costs of new household items
  • The cost difference between the old and the new home
  • The cost of oversized or heavy items during the move 
  • The cost of other miscellaneous items, such as mails forwarded, new furniture items purchased, etc. 

How to File Form 3903 for Moving Expense Tax Deductions

Before 2018, you had to go through a time and distance test to qualify for the tax deduction.

Nowadays, Form 3903 is available only to U.S. military personnel who can claim the moving expenses without attempting the time and distance test.

Here’s how you can claim moving expenses as tax deductions in 3 steps: 

Step 1: Gather Your Receipts for Moving Expense Deductions

Include all your invoices, mileage logs, and meal and vehicle expenses. 

Step 2: Use the IRS Form 3903

Record all the reasonable deductible expenses specified in this form. Include your name and social security number, and record your expenses in both lines 1 and 2. 

Step 3: Attach the Form to your Federal Tax Return 

While filing your tax, attach IRS Form 3903 to the IRS 1040 Form and keep a copy of it with you. 

Conclusion

Moving costs were once a significant amount of money that Americans could write off while filing their taxes.

However, the TCJA changed this rule for most taxpayers until 2025.

Moving expenses tax deductions are now eligible only for active-duty military members who do not have to meet the time and distance requirements.  

FAQs

1. Can I deduct moving expenses when relocating for a new job?

No, unless you are an active-duty member of the U.S. armed forces. 

The TCJA suspended job-related moving expense deductions for other taxpayers until 2025. 

2. Are moving expenses itemized on state taxes?

Relocation costs are still taxable in a few states, as some states have not adopted the recent federal tax changes.

Check your state’s tax codes or seek guidance from your professional CPA to determine if moving expenses remain deductible in your state.

3. What is the purpose of IRS Form 3903?

IRS Form 3903 is a tax form you need to fill for claim moving expense tax deduction if you are a member of the armed forces.

If you are relocating for a new job outside of the United States, you must be a U.S. citizen or resident to qualify for tax deductions. 

4. Are moving expenses tax deductible in New York state?

The 2018-2025 TCJA rule eliminated tax deductions for most Americans who write off moving expenses.

However, during that period, relocation costs were taxable in states like New York, where taxpayers could itemize their moving costs in NYC as part of their state income tax. 

5. Does Virginia allow a deduction for moving expenses?

Residents can deduct moving expenses on state taxes in Virginia.

Please note that taxpayers can claim moving expenses as tax deductions in Virginia if they attribute them to Virginia’s income when moving into or within the state.

Moving expenses for relocating out of Virginia should be attributed to the laws of the other state to which they are moving.