TCJA Suspension: Moving Expense Deduction Rules and Military Exception

(UNITED STATES) The federal tax break for moving expenses remains off the table for most people through the 2025 tax year, while a long-standing exception continues for active-duty members of the U.S. Armed Forces who relocate under official orders. Under rules carried over from the Tax Cuts and Jobs Act (TCJA), the deduction for moving expenses is suspended for tax years 2018 through 2025 for all non-military taxpayers. In July 2025, Congress approved, and the President signed, legislation that will permanently eliminate the moving expense deduction for non-military taxpayers starting in 2026.

The military exception remains unchanged: service members on active duty who move because of a permanent change of station (PCS) can still deduct certain moving expenses and, in many cases, exclude in-kind moving support from taxable income.

How employer-paid moving expenses are treated (2018–2025)

For non-military taxpayers during 2018–2025:

• Employer-paid moving expenses (including cash reimbursements or allowances) are taxable wages and subject to withholding.
• The only carveout is for the Armed Forces: in-kind moving and storage services, and certain reimbursements tied to a PCS, may be excluded from income for eligible service members.
• The July 2025 law clarified the deduction will not return for non-military taxpayers after 2025, closing the pre-TCJA benefit.

Real-world impact: a family relocating for a job in 2025 faces full federal tax on any relocation stipend and has no above-the-line deduction to offset out-of-pocket moving expenses. By contrast, a soldier reassigned under PCS can still claim eligible costs using the IRS form for that purpose.

Official guidance and forms for military families

The IRS provides detailed guidance in Topic No. 455 explaining who qualifies and which expenses can be claimed when a PCS order is the reason for the move. Confirm the current standard and claims process at:
– IRS Topic No. 455: Moving Expenses

Military filers claim eligible costs using IRS Form 3903, Moving Expenses, filed with the annual tax return. The form is available at:
– IRS Form 3903

Policy status and what’s taxable in 2025

• Before the TCJA, taxpayers could claim an above-the-line deduction for moving expenses tied to starting work at a new principal place of work, subject to distance and full-time employment tests. Those tests never applied to Armed Forces moves incident to a PCS.
• Under the TCJA, the moving expense deduction is suspended for non-military taxpayers for 2018–2025 and employer-paid moving expenses for non-military workers are treated as taxable income.
• In July 2025, Congress and the President made the suspension permanent for non-military taxpayers starting in 2026.
• The military exception remains: active-duty households on PCS orders still have access to deductions for reasonable moving expenses and exclusion for in-kind moving and storage support tied to PCS.

State rules may differ—some states do not follow the federal change—so taxpayers should check state guidance or consult a tax preparer.

Military eligibility standard

• The controlling standard is active duty plus a PCS order.
• If a service member, spouse, or dependent moves under official orders incident to a PCS, the move qualifies for the special rules.
• Distance and full-time employment tests from the old law do not apply to PCS moves.
• Eligibility is driven by orders, not by commute length or hours worked in a civilian role.

What military families can deduct

Active-duty members who move under PCS orders can deduct reasonable moving expenses in two main groups:

1. Moving household goods and personal effects
   • Packing, crating, and transporting household goods and personal effects.
   • Storage and insurance for household goods and personal effects for up to 30 consecutive days after the items leave the former home (includes in-transit and foreign-move storage).
   • Moving goods from a place other than the former home is allowed, but the deduction is limited to what it would have cost to move them from the former home.

Example: Paul Brown paid $900 to move furniture from his North Carolina apartment and $3,000 to move stored items from Georgia. It would have cost $1,800 to ship the stored furniture from North Carolina. Paul may deduct $2,700 total: $900 + $1,800 (cap applied).

1. Traveling to the new home
   • Transportation and lodging for the service member and household members, including the day of arrival.
   • If driving, either actual gas and oil costs (with records) or the IRS standard mileage rate of 21 cents per mile for moving in 2025; tolls and parking are deductible under either method.
   • Household members do not have to travel together, but only one trip per person is deductible.

Example: Robyn’s family incurred $250 (mileage), $40 tolls, and $150 lodging ($440) plus Robyn’s $400 flight. Combined deduction: $840.

Common non-deductible items (even for PCS moves)

• Meals while traveling
• Any part of the purchase price of a new home
• Car tags and driver’s license fees
• Costs of buying or selling a home (closing costs, mortgage fees, points)
• Costs of entering into or breaking a lease
• Home improvements to help sell a home
• Loss on the sale of a home
• Losses from disposing of club memberships
• Mortgage prepayment penalties
• Pre-move house-hunting trips
• Real estate taxes
• Refitting carpet or draperies
• Return trips to a former residence
• Security deposits (including forfeited amounts)
• Storage charges except those in transit and for foreign moves, and only within the 30-day window

Important limits: expenses must be reasonable and directly related to the move. If goods are moved from a different location, the deduction cannot exceed the cost of moving them from the former home.

In-kind moving support and storage provided by the government for PCS moves remain excluded from income for eligible members. When the government arranges/pays the carrier directly or provides authorized storage, the value is not counted as taxable wages. Reimbursements that fit PCS rules can also be excluded. This exclusion does not apply to non-military workers.

Note: meals remain non-deductible. The IRS standard mileage rate can simplify recordkeeping, but choosing actual costs requires strong documentation.

Filing, records, and practical tips

Military families claim eligible moving expenses using Form 3903. The form flows to the individual return and computes the net deductible amount after subtracting reimbursements or in-kind support. The form and instructions are here:
– IRS Form 3903

Keep these documents:
– A copy of PCS orders
– Travel itineraries
– Shipping contracts
– Receipts for lodging, tolls, parking, packing, crating, and storage
– Mileage logs: date, starting point, destination, and miles
– Hotel invoices and proof of payment

Good records are essential—especially if audited. The IRS will verify the move was incident to a PCS and that expenses were reasonable and directly tied to the move.

Steps to take — before, during, and after a PCS move

1. Before you move
   • Save a copy of the PCS orders for your tax file.
   • Ask whether the move will be handled in-kind or will require you to pay and seek reimbursement.
   • Note storage dates carefully; only up to 30 consecutive days after items leave the former home are deductible.
   • If moving goods from multiple locations, price what the move would cost from the former home (this can cap your allowable deduction).
2. During the move
   • Keep every receipt for packing, crating, shipping, storage (within 30 days), lodging, tolls, and parking.
   • If you drive, decide between the standard mileage rate or actual gas/oil costs and document accordingly.
   • If household members travel later, keep their receipts together with the orders.
3. After you arrive
   • Gather reimbursement statements; amounts excluded from income cannot be deducted again.
   • Complete Form 3903 with totals for household goods and travel, then subtract reimbursements/in-kind amounts.
   • File the form with your federal return and retain documents in case the IRS requests proof.

Guidance for non-military taxpayers in 2025

• There is no federal deduction for moving expenses in 2025 for non-military taxpayers.
• Most employer reimbursements are taxable wages for 2018–2025 and will appear on the W-2.
• Workers should review pay statements to see how relocation pay is taxed and discuss any gross-up arrangements with employers (an employer-paid tax gross-up offsets the tax cost).
• Some states may still allow a moving expense deduction or exclusion—check state rules or consult a tax preparer.

Common non-deductible costs for civilians (and even many military PCS items) include breaking a lease, paying closing costs, replacing carpet to sell a home, loss on sale, and house-hunting trips before the move.

Special cases and mixed situations

• Foreign assignments: storage for foreign moves is allowed within the same 30-day window; in-kind storage provided under PCS orders can be excluded from income.
• Split travel: spouses/dependents may travel at different times, but only one trip per person is deductible.
• Mixed payment scenarios: if the government pays the carrier directly (in-kind), that support is usually excluded, and the taxpayer cannot deduct the same costs again. If the family pays out of pocket and receives no taxable reimbursement, those costs may be deductible under PCS rules.

Form 3903 and its instructions explain how to report mixed payment amounts and avoid double counting.

What changed (TCJA and 2025 law) and what remains

• The TCJA suspended the deduction for most taxpayers and repealed the exclusion for reimbursements for 2018–2025, except for the Armed Forces.
• The 2025 law makes that suspension permanent for non-military taxpayers starting in 2026.
• What did not change: active-duty service members on PCS orders still have:
  • No distance or full-time employment tests,
  • Continued access to a deduction for reasonable moving expenses,
  • Continued exclusion for in-kind moving and storage support tied to PCS.

Human effects and employer considerations

• Example contrasts:
  • A civilian nurse moving for a 2025 job offer will pay tax on any relocation bonus and cannot deduct moving costs.
  • A staff sergeant ordered to Germany can still claim eligible moving expenses and exclude in-kind moving support tied to the PCS.
• Employers recruiting across state lines may gross up relocation benefits to cover tax consequences, which increases employer costs. The military’s PCS framework centralizes many moving supports and keeps them out of taxable wages when provided in-kind to eligible members.

Final cautions and takeaways

For 2025: For non-military taxpayers, there is no federal deduction for moving expenses, and employer reimbursements are taxable wages. For active-duty members of the Armed Forces moving under PCS orders, the deduction for reasonable moving expenses remains available, and in-kind moving and storage support under PCS rules continues to be excluded from income.

Key reminders:
– Meals are not deductible.
– Car repairs, insurance, depreciation, return trips, and amounts excluded from income cannot be deducted.
– Keep thorough records and PCS orders.
– When in doubt, check IRS Topic No. 455: Moving Expenses or consult a qualified tax preparer.

The bottom line: civilian movers should budget for taxes on relocation payments and check state rules for relief. Military filers should use Form 3903, keep tight records, and avoid double-counting reimbursements or in-kind support.