The average cost for an in-town move is about $2,000, while moving across the country can approach $30,000. Because moving is often related to a new job, many people wonder if these considerable expenses are deductible. First, we’ll take a look at the current and previous rules regarding how to deduct moving expenses.
Can I Deduct Moving Expenses?
Though the question is simple, the answer is complicated. Prior to the implementation of the Tax Cut & Jobs Act (TCJA), a large percentage of taxpayers were eligible to deduct moving expenses.
Tax Cut & Jobs Act eliminated the moving deduction from 2018 to 2025, although there is an exception. Therefore, if you are a military member and are moving due to a permanent change of station, you can deduct your unreimbursed moving expenses. This includes expenses incurred for moving your entire family0.
When the TCJA expires in 2025, moving expenses for non-military moves will resume being deductible if you meet the distance and purpose criteria.
Previous Requirements for Deducting Moving Expenses
Before the TCJA took effect in 2018, you could deduct moving expenses if you met the following requirements:
- Your employer did not pay for the move or reimburse you with pre-tax funds. If your employer reimbursed you but included it in your taxable income, you could claim the moving expense deduction on your tax return.
- Your new home had to be closer to your new workplace than your former home. Your new job location also needed to be at least 50 miles further from your old home than your new home.
- You needed to work full-time for at least 39 out of the following 52 weeks at your new job.
Note that members of the military had different requirements for deducting moving expenses.
Moving expenses were an above-the-line deduction that directly reduced your taxable income regardless of whether you were itemizing your deductions on your return. When the TCJA expires in 2025, it’s unclear whether the government will reinstate the deduction using the rules above or whether the requirements will change for deducting moving expenses.
Can Businesses Still Deduct Moving Expenses?
Business entities can still fully deduct any moving expenses. Note that this does not apply to sole proprietorships. To deduct moving expenses for your company, you need to either be a corporation or an LLC.
Company moving expenses are deductible regardless of the distance between the old and new locations. Companies also do not need to justify the reason for the move.
Businesses can deduct any of the following moving expenses:
- Transportation of goods
- Packaging materials
- Moving labor (including the physical transportation of goods and packaging labor)
- Gas Mileage
- Commissions related to locating new space
For businesses, you list moving expenses as another deduction on your business tax return, and there are no special forms to complete.
Are There Any Exceptions?
Moving expenses are still deductible if you or your spouse is a member of the military on active duty who moves according to a military order. But you won’t be able to claim just anything as a moving expense.
Allowable expenses are anything that is reasonable for the circumstances of your move of your family and goods, such as:
- Gas expenses related to the transportation of goods or family members. Alternatively, you can calculate the transportation deduction using the federal mileage rate. The moving mileage rate in 2023 is $0.22/mile.
- Cost of temporary storage of your household
- Travel expenses, including hotel stays during the move to your new home.
- Cost of movers (including the cost to have someone package your home)
- Insurance purchased for your move
Closing Thoughts on Moving Deductions
Moving is a considerable expense that you should consider carefully. Before the TCJA, the cost of moving was partially offset by the tax break. However, since the implementation of the TCJA, very few people qualify for the deduction. So unless you’re military personal moving due to a permanent change in station, you won’t be able to take the deduction.
While very few individuals qualify for the moving deduction, most businesses still qualify to fully deduct the expense of moving their business to a new location.
It’s uncertain whether the moving expense deduction will resume in 2025 when the TCJA expires or if the rules will remain unchanged from the previous deduction.
Want to see what a big move would look like for you or your business tax-wise? Our tax professionals can help explore how to deduct moving expenses in a no-cost exploration consultation. Click here to set one up now!