Are Moving Expenses Tax Deductible?

Are Moving Expenses Deductible?

At the federal level, only armed forces members can deduct their moving expenses. These individuals include:

• Employees in the intelligence community
• Active-duty service members who move due to a military order and permanent change of station

Within that narrow definition, eligible taxpayers can deduct "reasonable" unreimbursed moving expenses on their federal income tax returns.

What Are Qualified Moving Expenses?

Qualified moving expenses include costs related to moving personal property and household goods, as well as travel costs associated with the move. Eligible expenses include:

• Transportation costs
• Professional movers
• Packing materials
• Storage costs for up to 30 days
• Insurance
• Basic lodging
• Gasoline
• Airfare
• Parking fees
• Tolls

What Moving Expenses Are Not Tax Deductible?

Generally speaking, you can't deduct any moving expenses that the government reimburses or provides an allowance for. The IRS also won't let you write off the following types of costs:

• Meals during the move
• Items you buy during the move
• General car maintenance and repairs
• Unnecessary side trips
• House-hunting expenses
• Car tags
• Driver's license fees
• Costs of purchasing or selling a home
• Fees for breaking a lease
• Deposits for entering into a lease
• Home improvements made to help sell a home
• Loss on the sale of a home
• Fees for canceling club memberships
• Penalties for paying off a mortgage early
• Real estate taxes
• Refitting carpet and curtains
• Return trips to your former home
• Security deposits

How Much Can You Save by Deducting Moving Expenses?

If you can write off moving expenses, the amount you can save on your tax bill depends on your tax bracket and total eligible moving costs.

Example: Let's say the highest portion of your income falls in the 12% federal tax bracket and you pay $5,000 in qualifying moving expenses. The deduction reduces your taxable income by $5,000, which could lower your federal tax bill by about $600 ($5,000 × 12%). For those who qualify, the deduction can meaningfully offset the cost of a required relocation.

How to Deduct Moving Expenses

Deducting your moving expenses is relatively straightforward. Here's how the process works:

1. Determine whether you qualify. The IRS provides a tool that helps you verify whether you can deduct your moving expenses.
2. Gather your expenses. Find receipts and make a list of all the eligible costs of your move, such as buying packing materials and renting a trailer.
3. Calculate your deduction. Use IRS Form 3903 to figure the amount of your deduction, referencing Instructions for Form 3903 if needed.
4. Adjust your income. Use the amount you calculated to fill out Line 14 of Schedule 1 Part II as an adjustment to income. The information flows into your adjusted gross income (AGI).

Frequently Asked Questions

The Bottom Line

Tax reforms eliminated the moving expense deduction for most individuals. Now, only qualifying military members and employees in the intelligence community may write off the costs of moving. However, this rule applies at the federal level. You may still get a tax break if you moved recently and your state allows you to deduct the expenses on your state income tax return. Check your state government's tax website for more information.