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Global Employment & Expansion — 6 min
Are moving expenses tax deductible?
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Relocating to a new city — or even a new country — is an exciting opportunity. But between the moving trucks, boxes, and endless to-do lists, it can also become an expensive endeavor.
You may be wondering: “Are my moving expenses tax deductible?” or “Will my relocation reimbursements impact my taxes?”
Understanding the tax implications of relocation is essential for employees, employers, and anyone managing global moves. In this article, we’ll cover what you need to know about moving expenses, reimbursements, and their tax treatment so you can stay compliant and maximize your financial planning.
And if navigating tax complexities feels overwhelming? We’ll share how professional relocation services, like those from Remote, can simplify the process for you and your global team.
Jump straight to a key chapter
Understanding moving expenses and taxes
What are moving expenses?
Moving expenses are the costs incurred when relocating from one home to another. These expenses often include:
Transportation costs (e.g., truck rentals, movers, mileage).
Packing supplies (boxes, tape, etc.).
Temporary storage fees.
Shipment of household goods.
On the surface, these costs may seem straightforward. However, the tax implications of moving expenses depend on several factors, including who pays for the move, whether reimbursements are offered, and the country’s tax laws.
Are moving expenses tax deductible?
The short answer: for most taxpayers in the United States, moving expenses are no longer tax deductible.
Why? The Tax Cuts and Jobs Act (TCJA)
The Tax Cuts and Jobs Act of 2017 made significant changes to tax laws, including eliminating moving expense deductions for most taxpayers. This restriction will remain in place through 2025 unless Congress decides otherwise.
Who still qualifies? The deduction is now exclusively available for active-duty members of the US Armed Forces who are relocating due to a military order.
Example: A Navy officer receives orders to relocate to a new base. The cost of moving their family’s household goods, transportation, and storage would qualify as a deductible moving expense.
For everyone else — employees, self-employed workers, or individuals — moving expenses are no longer tax-deductible under current US tax law.
Tax treatment of relocation costs in other countries
Tax treatment of moving expenses varies by country. Here's an overview of how some countries handle these expenses:
United Kingdom
In the UK, moving expenses are not directly tax-deductible for individuals. However, if your employer contributes to your relocation costs, you may qualify for a tax exemption on these contributions, up to £8,000, provided certain conditions are met. This exemption applies when the move is work-related, and the new residence is within a reasonable commuting distance to the new workplace.
Germany
Germany allows individuals relocating for work to deduct certain moving expenses from their taxable income. Deductible expenses can include transportation costs for personal belongings and travel expenses for house-hunting trips. Additionally, even without specific receipts, individuals may qualify for a standard relocation deduction, with amounts increasing for each additional family member.
Canada
In Canada, individuals can deduct eligible moving expenses from their income if the move is to start a new job or business, or to attend a post-secondary institution, and if the new residence is at least 40 kilometers closer to the new place of work or study. Deductible expenses may include transportation and storage costs, travel expenses, and temporary living expenses.
Australia
In Australia, moving expenses are generally not tax-deductible for individuals. However, if an employer reimburses relocation costs, these may be exempt from fringe benefits tax, provided certain conditions are met.
France
In France, moving expenses paid by an employer can be considered a tax-free benefit under certain conditions, particularly if the move is required for professional reasons. However, individuals cannot directly deduct moving expenses from their taxable income.
Netherlands
In the Netherlands, employers can provide tax-free reimbursements for moving expenses up to a certain limit if the move is work-related and the new residence is at least 25 kilometers closer to the workplace. Individuals cannot directly deduct moving expenses from their taxable income.
Tax laws are complex and subject to change. It's advisable to consult with a tax professional or refer to the tax authority in your country for personalized advice.
How much will it cost to relocate?
Learn more about the costs of rAelocation for a new job and discover actionable tips to help you estimate relocation costs accurately.
Relocation reimbursements: Are they taxable?
Many companies offer relocation packages or reimbursements to help employees cover the costs of moving. But what does that mean for taxes?
Relocation reimbursement and taxability
Here’s the key fact: If your employer reimburses your moving expenses, that reimbursement is considered taxable income. This applies to:
Direct payments to you for moving costs.
Payments made on your behalf (e.g., if your company pays the moving company directly).
Understanding relocation income tax allowance (RITA)
To soften the tax impact of relocation reimbursements, some employers offer a Relocation Income Tax Allowance (RITA). This allowance helps cover the additional taxes employees owe on their relocation reimbursements.
Example Scenario:
Your employer reimburses you $10,000 for moving costs.
That $10,000 is added to your taxable income.
With a RITA, your employer compensates you for the extra taxes you’ll owe due to the reimbursement.
RITAs can help employees avoid financial strain, but not all companies offer them. This is where proper planning — and professional relocation services — can make a huge difference.
What qualifies as a moving expense?
When understanding the taxation of relocation expenses, it’s helpful to know what qualifies as a “moving expense.” While moving expenses are no longer deductible for most taxpayers, some expenses can still qualify under employer relocation policies or military deductions.
Qualified moving expenses:
Transportation costs: Shipping household goods, furniture, and personal belongings.
Travel expenses: Costs for you and your family to relocate (e.g., airfare, mileage, tolls).
Storage fees: Temporary storage for up to 30 days.
Non-qualified moving expenses:
Meals during the move.
Costs related to home-hunting trips or temporary housing.
Expenses for breaking a lease or home sale fees.
Personal costs, like new furniture or decorating your new home.
Employers often have clear policies outlining which moving expenses they will reimburse. If you’re relocating for work, make sure to clarify which costs are covered and how they’ll be reported for tax purposes.
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The taxation of relocation expenses for employers and employees
Relocation expenses can be tricky to manage, especially for global teams. Let’s break it down for both employers and employees:
For employees:
If you receive a relocation reimbursement, it will likely appear on your W-2 form as taxable income.
Keep receipts for all moving-related expenses, as your employer may require proof to process reimbursements.
Ask your employer if they provide a Relocation Income Tax Allowance (RITA) to offset the tax burden.
For employers:
Reimbursements for relocation expenses are considered taxable wages and must be reported as such.
Employers must account for relocation reimbursements when calculating payroll taxes.
Offering a RITA or gross-up payment can help attract and retain talent by reducing employees’ tax liabilities.
Why relocation taxes are especially relevant for global teams
Managing relocation expenses becomes even more complex when employees move across borders. Different countries have varying tax rules for reimbursements, allowances, and deductions.
Challenges include:
Ensuring compliance with local tax laws in multiple countries.
Managing gross-up payments and allowances across currencies.
Accurately reporting relocation expenses for payroll and income tax purposes.
Simplifying relocation: Why professional help matters
Relocating an employee — or an entire team — requires careful planning, financial foresight, and tax compliance. Managing all of this alone can be overwhelming. That’s where professional relocation services come in.
Remote’s relocation services streamline the complexities of global mobility. Whether you’re moving employees locally or internationally, Remote provides:
Expert compliance support: Ensuring all moving expenses and reimbursements meet local and international tax laws.
End-to-end relocation management: From planning logistics to managing costs.
Tax reporting made simple: Helping employers and employees navigate the tax implications of relocation.
Why does this matter? Simplifying relocation not only reduces stress but also ensures employees have a smooth transition so they can focus on doing their best work.
Introducing Remote Relocation Services: Attract top talent and scale globally
Learn more about Remote's Relocation Services to help you attract top talent and scale globally. Discover how Remote makes international relocation for your team members quick, simple, and efficient.
Make relocation easy with Remote
Relocating for work can be a life-changing opportunity — but navigating and adhering to tax laws that are likely to change can be stressful.
While moving expenses are no longer tax-deductible for most people, understanding the tax implications of reimbursements and allowances is key.
For employers, offering competitive relocation packages with tools like Relocation Income Tax Allowances (RITA) can make a significant difference in attracting and retaining talent.
The good news? You don’t have to navigate the relocation process alone. Partner with Remote to simplify the process, ensure compliance, and give your global team the smoothest transition possible.
Ready to learn more about how Remote can make relocation fast and easy for your team? Download Remote’s Relocation Guide for insights on employee relocation or contact our Mobility gurus for more information today!
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