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.