What kinds of moving expense reimbursements or payments are taxable income to an employee?
Author: Alice Gilman
The 2017 federal tax reform law suspends an employer's tax-free reimbursement of an employee's qualified moving expenses from January 1, 2018, through December 31, 2025. However, in Notice 2018-75, the IRS concluded that an employer's reimbursement in 2018 of an employee's qualified moving expenses incurred in 2017 remains tax-free.
Unless the general suspension of tax-free moving expense reimbursements is extended in subsequent legislation, an employer may resume reimbursing employees for the following qualified moving expenses on a tax-free basis, effective January 1, 2026:
- Any part of a purchase price of a new home;
- Car tags and drivers' licenses;
- Sight-seeing trips taken while traveling to a new home;
- Meals eaten while traveling to a new home;
- Expenses related to selling a home, including closing costs, mortgage fees and points;
- Expenses related to entering or breaking a lease, including forfeited security deposits;
- Home improvements to help sell a home;
- The loss on a sale of a home;
- Mortgage penalties;
- Pre-move house hunting expenses;
- Real estate taxes;
- Refitting carpeting and drapes; and
- Return trips to the former home.