For more than 50 years, IRC §217 allowed U.S. taxpayers to deduct qualifying moving expenses from gross income as an above-the-line adjustment — making moves for job-related reasons partially tax-subsidised. The Tax Cuts and Jobs Act of 2017 (Pub. L. 115-97, Section 11049) suspended both the moving expense deduction under IRC §217 and the qualifying employer-paid moving expense exclusion under IRC §132(g) for tax years 2018 through 2025. Active-duty military members on PCS orders retained both under IRC §217(g).
The practical consequence for civilians in 2018-2025: every dollar of employer-paid moving expense is W-2 taxable wages; every dollar of out-of-pocket moving cost paid by the employee is not deductible. The pre-TCJA framework where job-related moves were partially tax-subsidised was eliminated.
As of May 2026, Congress had not enacted legislation extending the suspension beyond 2025 OR restoring the §217 deduction for civilians. Several legislative proposals have been introduced (most recently the "One Big Beautiful Bill Act" passed by the House in 2025), but none have been enacted as of this writing. The 2026 tax year treatment of civilian moving expenses is therefore in legal limbo — verify the current state of the law with IRS Publication 521 before relying on this guide.
IRC §217(g) preserves both the §217 deduction and §132(g) exclusion for "members of the Armed Forces of the United States on active duty who move pursuant to a military order and incident to a permanent change of station." Specifically:
The §217(g) exception covers qualifying moving expenses fully — both the income exclusion for employer-paid expenses (DoD shipment of household goods via TQSE, MALT, per diem) and the above-the-line deduction for out-of-pocket expenses (e.g., personally procured move costs above the DoD reimbursement).
The new principal place of work must be at least 50 miles farther from the old home than the old principal place of work was. Example: if the old job was 5 miles from the old home, the new job must be at least 55 miles from the old home for the move to qualify under the distance test.
For military PCS moves, the distance test is typically automatic since the military is the employer mandating the move, and PCS moves typically involve substantial geographic relocation.
The taxpayer must work full-time at the new location for at least 39 weeks during the 12 months following the move. The 39 weeks need not be consecutive. The time test is waived for service members on PCS orders under §217(g) — the military's order documents satisfy the time test automatically.
The move must be "closely related" in time to the start of the new job — typically within 1 year of the start date. For military members reporting to a new duty station, the timing is typically automatic per PCS orders.
| Expense category | Deductible? | Notes |
|---|---|---|
| Packing materials and labor | ✓ Yes | Both professional packing and supplies for self-packing |
| Loading and unloading labor | ✓ Yes | Hired help or movers |
| Shipping household goods and personal effects | ✓ Yes | Rail, truck, ship, air; includes auto transport for POV |
| Storage-in-transit up to 30 days | ✓ Yes | If items must be stored mid-move; days 31+ not deductible |
| Storage and insurance during transit | ✓ Yes | Cargo insurance for household goods |
| Transportation for member and family during move | ✓ Yes | Air, rail, bus, or POV (mileage at 22 cents/mile 2026) |
| Lodging during the move (not at new home) | ✓ Yes | Hotel during cross-country drive |
| Lodging at the new home (limited) | ✓ Yes | Day-of-arrival hotel; not extended hotel stay while looking for permanent housing |
| Parking and tolls during the move | ✓ Yes | Documented route only |
| Meals during the move | ❌ No | Eliminated by TCJA — even for military |
| Sightseeing or side trips | ❌ No | Must be direct-route only |
| Pre-move home-hunting trips | ❌ No | Eliminated under pre-TCJA; remains non-deductible for military |
| Lease deposits or break fees at old home | ❌ No | Considered personal expenses |
| Costs of buying or selling a home | ❌ No | Not a moving expense |
| Costs of getting a new driver's license, vehicle registration | ❌ No | State-level personal expenses |
| Long-term temporary lodging (over 30 days) | ❌ No | 30-day limit for storage-in-transit context |
Form 3903 (Moving Expenses) is filed with Form 1040 by qualifying military members. The form has two main sections:
Total cost of packing, crating, shipping, and storage-in-transit (up to 30 days) of household goods and personal effects. For military members where the DoD handled the shipment, the DD Form 1351-2 (Travel Voucher) or the W-2 Box 12 code P amount reflects the DoD payment — this amount is the excluded portion and does not appear on Form 3903 (it was never income to begin with). Out-of-pocket costs above the DoD payment are deductible.
Member's and family's travel expenses from old to new duty station: actual gas/oil cost OR 22 cents/mile (2026 rate), lodging during the move, parking, and tolls. Meals NOT deductible.
Total from Form 3903 goes on Schedule 1 line 14 (renumbered in later forms). This is an above-the-line adjustment to gross income — it reduces AGI and therefore both federal income tax and the basis for many income-driven calculations (state tax conformity, AMT, education credits, etc.).
Per IRS Rev. Proc. 2025-32, the 2026 standard mileage rate for medical or moving expenses is $0.22 per mile. This rate applies to military members driving personally owned vehicles on a PCS move.
Coverage:
Not covered (so include separately as actual costs if more economical):
Calculation example: cross-country PCS Boston to San Francisco, 3,100 miles. Mileage deduction = 3,100 × $0.22 = $682. Compare to actual gas costs for the trip (3,100 miles ÷ 25 mpg × $4/gal = $496) — the standard mileage rate is more generous in this case.
For active-duty military on PCS orders, DoD-paid qualifying moving expenses are excluded from gross income per IRC §217(g)/§132(g) carve-out. The DoD reports the excluded amount on the LES (Leave and Earnings Statement) and on the W-2 in Box 12 with Code P. The amount does NOT appear in Box 1 (wages) or Box 3 (Social Security wages) — confirming the tax-free treatment.
Common DoD payments that are excluded under §217(g)/§132(g):
Payments above qualifying amounts (e.g., PPM profit, TLA after qualifying period) are taxable as W-2 wages.
For non-military employees, ALL employer-paid moving expenses are W-2 taxable wages — there is no Code P exclusion. The employer reports the gross amount in Box 1, Box 3 (up to SS wage base), and Box 5. The employee owes income tax and FICA on the full amount.
To make the employee whole, employers typically "gross up" relocation packages — increasing the gross payment so that, after taxes, the employee retains the intended economic benefit. The gross-up math is iterative and can add 30-100% to the employer's relocation cost. See the companion guide on Corporate Relocation Tax Gross-Up 2026 for the detailed mechanics.
The TCJA elimination of the federal §217 moving deduction is at the federal level only. Several states "decoupled" from this change and continue to allow state-level moving expense deductions for state income tax purposes. As of May 2026:
| State | Authority | Notes |
|---|---|---|
| California | Schedule CA (540) Part I Line 14 | Continues pre-TCJA §217 conformity; same distance and time tests |
| Hawaii | HRS §235-2.4 | Maintains pre-TCJA conformity |
| New York | NY Tax Law §612(c)(11-a) | State subtraction modification for moving expenses |
| Arkansas | Ark. Code §26-51-415 | Continues moving deduction under state code |
| New Jersey | N.J.A.C. 18:35-2.2 | NJ allows deduction; verify with NJDOR |
| Massachusetts | Massachusetts conformity (limited) | State conformity varies; verify with MA DOR |
The remaining 44+ states follow federal treatment — no state moving deduction since 2018. Includes the major states: Texas, Florida, Tennessee, Washington, Nevada, Wyoming, South Dakota, Alaska, New Hampshire (no state income tax — federal-only matter); and Illinois, Pennsylvania, Georgia, North Carolina, Virginia, Ohio, Michigan, Indiana, Wisconsin, Minnesota, Colorado, Arizona, Maryland, Connecticut, Oregon, Iowa, Kansas, Kentucky, Louisiana, Oklahoma, Maine, Vermont, Idaho, Montana, Utah, Delaware, Rhode Island, Mississippi, Missouri, Nebraska, New Mexico, North Dakota, Alabama, West Virginia, South Carolina (state income tax but no separate moving deduction since 2018).
Scenario. E-6 staff sergeant moving from Fort Bragg NC to Joint Base Lewis-McChord WA in 2026. Distance: approximately 2,900 miles. PCS orders cut Q2 2026. Member's family: spouse + 2 children.
Total DoD-excluded: approximately $16,000 — appears on W-2 Box 12 code P.
Scenario. Civilian software engineer moves from New York to Austin TX in 2026 for a new job. Employer pays $20,000 relocation package via professional mover + paid travel + paid temporary lodging.
To make the employee whole, employer typically grosses up to cover the tax. Gross-up formula = $20,000 / (1 - 0.36) = $31,250 total employer cost. Tax-on-tax portion: $11,250 additional payment.
Civilian DOES NOT file Form 3903 in 2018-2025 — the §217 deduction is suspended. Out-of-pocket moving expenses NOT covered by the employer are not deductible. Tax planning option: maximize the state-level deduction if moving to/from a state that allows it (CA, HI, NY, AR, NJ — but only NY among those is relevant to this NY-to-TX move).
Scenario. Civilian software engineer moves from Sacramento CA to Seattle WA in 2026 for a new job (50+ miles farther from old home, qualifying distance test). Out-of-pocket moving expenses: $4,500 (paid by employee, not reimbursed by employer).
For California residents in higher brackets, the state-only moving deduction is worth tracking — $400-$600 of state tax savings on a typical cross-country move is non-trivial.
Several legislative proposals have considered restoring or modifying the §217 moving deduction:
If Congress restores §217 for civilians in 2026 or later, the relevant filing year will need to be amended (via Form 1040-X) for any year where the deduction is restored retroactively. Always verify the current state of the law before filing any return claiming the §217 deduction.
Non-military: NO. TCJA suspended §217 for civilians 2018-2025; not extended. Military on PCS orders: YES under §217(g) exception.
Active-duty Armed Forces, Reserve/National Guard on Title 10 orders 180+ days, family members on PCS. Retirees moving to retired status (within 1 year of retirement).
Packing, shipping, storage (30 days), travel (POV at 22¢/mi 2026), lodging during move + day-of-arrival. NOT: meals, sightseeing, home buying/selling.
Moving Expenses form, filed with Form 1040 by qualifying military. Above-the-line deduction reducing AGI. Civilians should NOT file in 2018-2025.
Yes: California, Hawaii, New York, Arkansas, New Jersey (and Massachusetts limited). Other 44 states follow federal — no state deduction.
New job at least 50 miles farther from old home than old job was. Military PCS typically auto-qualifies.
Civilian: YES — W-2 Box 1, 3, 5. Military: NO — Box 12 code P excluded under §217(g)/§132(g) carve-out.
$0.22 per mile per IRS Rev. Proc. 2025-32 and IRS Notice 2025-67.