Who can still deduct moving expenses?

Active duty members of the Armed Forces moving pursuant to a military order and incident to a permanent change of station. They deduct qualifying costs on Form 3903 as an above-the-line adjustment, meaning it reduces adjusted gross income without itemizing.

Which states still allow a moving expense deduction?

Several states decoupled from the federal suspension and continue to allow it, including California, New York, Massachusetts, New Jersey, Arkansas, Hawaii, and Pennsylvania under its own rules. Because state rules differ, a move can be nondeductible federally and deductible on the state return.

Is employer-paid relocation taxable?

Yes. Employer reimbursement of moving costs is now taxable wages included in your W-2 and subject to payroll tax, where it was previously excludable. Many employers respond by grossing up the payment to cover the tax, which is worth confirming before accepting a relocation package.

Can I deduct moving expenses if I am self-employed?

Not as a personal moving expense deduction. However, moving business equipment, inventory, or an office is a business expense deductible on Schedule C. The distinction is between relocating your household, which is personal, and relocating business property, which is not.

What moving costs qualify for military members?

Reasonable costs of moving household goods and personal effects, storage in transit, and travel including lodging on the way to the new home. Meals during the move are not deductible, and neither are house hunting trips, temporary living costs, or expenses related to selling the old home.

Tax Answer

Can You Write Off Moving Expenses?

Federally, only if you are active duty military. But several states kept the deduction, and business relocation costs follow entirely different rules.

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A guide by Taxstra Tax & Accounting · CPA-led tax strategy for business owners

Your Guide

01The Federal Answer 02The Military Exception 03States That Still Allow It 04Employer Relocation and Business Moves 05Frequently Asked Questions

Written by Bryan Martin, CPA, Managing Partner and Founder of Taxstra. Last updated August 15, 2026.

Quick answer

The federal moving expense deduction is suspended for everyone except active duty members of the Armed Forces moving under military orders. That suspension was made permanent. Several states, including California and New York, decoupled and still allow the deduction on the state return.

Moving for a job used to come with a genuinely good deduction: an above-the-line adjustment available whether or not you itemized, and an exclusion for employer reimbursement so the help arrived tax free.

Both were suspended and both suspensions were later made permanent. The exception for active duty military survived intact, and a handful of states declined to follow the federal change at all.

The Federal Answer

Two changes, moving in the same unfavorable direction.

Before the change

Deduction available above the line
No itemizing required
Distance and time tests applied
Employer reimbursement excluded from income

Now

No deduction for civilians
Active duty military exception only
Employer reimbursement is taxable wages
Reimbursement also carries payroll tax

The reimbursement change hurts more than the deduction

Losing the deduction affects people who paid their own way. Losing the exclusion affects people whose employer paid, and it converted a tax-free benefit into taxable wages. If you are negotiating a relocation package, whether the employer grosses up for the tax is now a real negotiating point worth thousands of dollars.

The Military Exception

Preserved in full, and still above the line.

Active duty members of the Armed Forces moving pursuant to a military order incident to a permanent change of station keep the deduction. They also keep the exclusion for government-provided moving services and reimbursements.

Qualifies	Does not qualify
Moving household goods and personal effects	Meals during the move
Storage in transit within the allowed period	House hunting trips
Travel to the new home, including lodging en route	Temporary living expenses after arrival
Shipping a personal vehicle	Costs of selling or buying a home
Moving pets	Lease break fees and security deposits

Taxstra CPA Tip

Taxstra Tip

Because the military deduction is above the line, it reduces adjusted gross income directly. That improves eligibility for credits and deduction floors keyed to AGI, so it is worth more than an itemized deduction of the same size. It is claimed on Form 3903.

States That Still Allow It

Decoupling means a nondeductible federal move can be deductible at home.

States are not obligated to follow federal changes. Several kept their moving expense deduction, and several also kept the exclusion for employer reimbursement at the state level even though it is taxable federally.

States that have allowed a moving expense deduction after the federal suspension

California

New York

Massachusetts

New Jersey

Arkansas

Hawaii

Pennsylvania, under its own rules

State conformity changes by legislative session. Confirm the current year rule for your state before relying on it.

Watch Out

Keep the receipts even for a federally nondeductible move

People who know the federal deduction is gone often discard the paperwork, then discover at filing time that their state still allows it. Moving records cost nothing to keep and are impossible to recreate.

Employer Relocation and Business Moves

Two situations where costs are still handled favorably.

Employer relocation packages

Now taxable wages. Ask whether the package is grossed up. A payment that covers the move but not the tax on the move leaves you materially short.

Moving business property

Relocating equipment, inventory, or an office is an ordinary business expense on Schedule C or the entity return. This is a business cost, not a personal moving expense, and the suspension does not touch it.

Moving a home office

The business-property share of the move can be allocated to the business. Household goods remain personal, so an allocation is needed and should be documented.

The residency change itself

Usually the largest tax consequence of a move by a wide margin, and the one nobody plans for. Part-year returns, income sourcing, and departure-state scrutiny all follow.

That last point is where the real money sits. Moving between states triggers part-year filing in both, and states with high rates scrutinize departures closely, as covered in the state and local planning guide and the multi-state nexus guide. Physicians relocating for training or a first attending position should read the residency planning guide. For professionals who move continuously rather than once, the analysis is about tax home rather than moving costs, and that is covered in the locum tenens tax home guide and the travel nurse guide. Athletes and performers with multi-state duty days have a further layer in the jock tax guide.

Relocating Between States This Year?

Part-year returns, residency establishment, and income sourcing during the transition are where moves actually cost money. Book a free initial consultation with a Taxstra CPA.

Frequently Asked Questions

Not on a federal return, unless you are an active duty member of the Armed Forces moving under military orders. The moving expense deduction for everyone else was suspended, and that suspension was later made permanent. Several states still allow it on the state return.

A Move Is a Residency Event, Not Just a Deduction Question

Which state taxes your income, when residency changes, and how a departing state treats you afterward all matter far more than moving truck receipts. The initial consultation is free.

Next Steps

Filing it yourself is fine. Optimizing it is where the money is.

Getting the form right keeps you out of trouble. The strategies below are what actually lower the bill.

Want a CPA to run the numbers for you?

Free 30-minute call with a Taxstra CPA. No pressure, just the math for your situation.

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Authoritative Sources

Citations reflect U.S. federal tax law as of the article's last reviewed date.

Related Relocation and Residency Guides

Multi-State Nexus

When crossing a state line creates a filing obligation you did not expect.

State and Local Tax Planning

Establishing and defending a change of residence.

Residency Tax Planning for Physicians

Training moves, first-job relocation, and what actually applies.

Travel Nurse Tax Guide

Tax home rules for professionals who move continuously for work.