Moving expenses are no longer deductible because the Tax Cuts and Jobs Act of 2017 suspended the deduction for civilians starting in 2018, and the One Big Beautiful Bill Act signed on July 4, 2025 made that suspension permanent. The only people who can still deduct moving costs on a federal return are active-duty members of the Armed Forces and certain intelligence community employees.
What the 2017 Tax Law Changed
Before 2018, if you relocated for a new job and met the qualifying tests, you could deduct moving costs directly against your income. The Tax Cuts and Jobs Act added subsection (k) to Internal Revenue Code Section 217, suspending that deduction for tax years beginning after December 31, 2017.1Office of the Law Revision Counsel. 26 USC 217 – Moving Expenses Active-duty military members moving under a permanent change of station order were the sole exception.
The same law also ended the tax-free treatment of employer-paid relocation benefits under Internal Revenue Code Section 132(g). Before 2018, moving money from your employer was excluded from income. After the change, those payments became fully taxable wages.2Office of the Law Revision Counsel. 26 USC 132 – Certain Fringe Benefits
Both suspensions were originally set to expire after December 31, 2025. The deduction and the employer exclusion were expected to return automatically for the 2026 tax year, and many people planned around that.
Why the Deduction Isn’t Coming Back in 2026
Section 70113 of the One Big Beautiful Bill Act (P.L. 119-21) stripped the expiration dates out of both suspensions. The change applies to tax years beginning after December 31, 2025.2Office of the Law Revision Counsel. 26 USC 132 – Certain Fringe Benefits There is no scheduled return. The civilian moving expense deduction is gone unless a future Congress restores it.
The 2025 law did add one narrow group to the exception list. Intelligence community employees who relocate for a change in assignment now receive the same treatment as active-duty military.1Office of the Law Revision Counsel. 26 USC 217 – Moving Expenses
What This Means If You’re Moving for Work
For a civilian relocating today, the tax picture is simple and unhelpful. Money you spend on the move is not deductible, and money your employer contributes is taxed as wages.
Costs You Pay Yourself
Out-of-pocket moving costs get no federal tax treatment. No form, no workaround. Spend $8,000 on movers, a truck rental, and gas to drive across the country, and you absorb the entire amount.
Money From Your Employer
When an employer pays for your relocation or reimburses you, the full amount is treated as taxable wages. It appears on your W-2 and is subject to federal income tax withholding, Social Security, and Medicare.3Internal Revenue Service. Publication 15-B (2026), Employers Tax Guide to Fringe Benefits You can’t offset those wages with a moving deduction, even if your move would have qualified under the old rules.
Some employers respond with a “gross-up,” an extra payment sized to cover the taxes on the relocation benefit so you end up with the intended value. A common approach uses the 22% federal supplemental withholding rate. On a $30,000 relocation package, the federal tax alone runs roughly $7,200, and a gross-up would cover that. Policies vary, and plenty of employers offer no gross-up at all. If a job offer includes relocation, ask about it before signing.
Who Can Still Deduct Moving Expenses
Two groups keep the deduction, and neither has to pass the old distance or time tests.
Active-duty members of the U.S. Armed Forces can deduct unreimbursed moving expenses when the move is tied to a military order for a permanent change of station.4Internal Revenue Service. Topic No. 455, Moving Expenses for Members of the Armed Forces and the Intelligence Community That covers the move to a first duty station, moves between duty stations, and the move from a last duty station back to a home of record. Deductible costs are limited to transporting household goods and personal effects, plus travel and lodging from the old home to the new one. Meals don’t count. The deduction is claimed on Form 3903 and carried to Schedule 1 of Form 1040.5Internal Revenue Service. Form 3903 – Moving Expenses
Starting with the 2026 tax year, intelligence community employees and new appointees who relocate for a change in assignment get the same deduction. The intelligence community is defined by the National Security Act and covers agencies including the CIA, NSA, and DIA.1Office of the Law Revision Counsel. 26 USC 217 – Moving Expenses Defense contractors working with these agencies do not qualify.
For both groups, employer-provided moving reimbursements can also be excluded from taxable income, but only up to amounts that would have been deductible if paid out of pocket.3Internal Revenue Service. Publication 15-B (2026), Employers Tax Guide to Fringe Benefits
Your State Return May Be a Different Story
Federal law decides your federal return. State income tax is separate, and not every state follows the federal treatment. A handful of states have broken from the TCJA rules and may still allow a moving expense deduction or exclude employer reimbursements at the state level. Whether yours does depends on how your state conforms to the current Internal Revenue Code. If you moved for work and file in a state with an income tax, check the state rules before you file. It won’t replace the federal deduction, but it’s worth knowing what’s still on the table.