The short answer: most people cannot deduct moving expenses on their federal taxes in 2026. The Tax Cuts and Jobs Act of 2017 suspended the moving expense deduction for everyone except active-duty military. But there are exceptions, state-level deductions, and related tax benefits that could still save you money. Here is what you need to know.
The federal moving expense deduction is suspended for tax years 2018-2025 under the Tax Cuts and Jobs Act. This means most workers cannot deduct moving costs like transportation, packing, and storage on their federal return. The suspension is currently set to expire after 2025, which could reinstate the deduction for 2026 and beyond - but Congress has not yet confirmed this. Check with a tax professional for the latest status when you file.
Active-duty military members who move due to a permanent change of station (PCS) can still deduct moving expenses on Form 3903. Deductible expenses include: transportation and storage of household goods, travel costs (mileage, lodging, tolls), and temporary storage for up to 30 days. Meals are not deductible. The mileage rate for moving is 22 cents per mile (2025 rate, 2026 rate TBD). This deduction is "above the line," meaning you get it even if you take the standard deduction.
Several states still allow moving expense deductions on state income taxes regardless of the federal suspension. States that may allow it include California, New York, Massachusetts, and Pennsylvania, among others. The rules vary by state - some mirror the old federal rules (50-mile distance test, work-related requirement), while others have their own criteria. If you moved for work and live in one of these states, check your state tax forms for a moving expense line.
If your employer reimburses moving expenses, that reimbursement is taxable income (reported on your W-2). Some employers offer a "tax gross-up" - additional money to cover the taxes owed on the reimbursement. For example, a $10,000 reimbursement with a gross-up might pay you $13,000-$14,000 total, so you net $10,000 after taxes. Always ask about gross-up during relocation negotiations.
While you cannot deduct the move itself, related expenses may be deductible: home office deduction if you are self-employed and the move is work-related, state and local tax (SALT) deduction for property taxes in your new state (up to $10,000), mortgage interest deduction on your new home, and charitable donations for items you donate during your pre-move declutter. Keep receipts for all donation drop-offs, as they are deductible at fair market value.
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Most people cannot deduct moving expenses on federal taxes in 2026. The deduction is suspended through at least 2025 under the Tax Cuts and Jobs Act. Active-duty military moving for a PCS can still deduct. Some states allow state-level moving deductions.
Yes, employer-paid moving expenses are taxable income since 2018. They are reported on your W-2 and you owe federal and state income tax on the amount. Ask your employer about a tax gross-up to offset the tax burden.
Several states including California, New York, Massachusetts, and Pennsylvania still allow moving expense deductions on state taxes. Rules vary by state. Check your state's tax forms or consult a tax professional for your specific situation.
