Moving Expense Reimbursement is when an employer pays back or directly covers an employee’s costs for relocating due to work. These costs may include transportation, packing, storage, or temporary lodging.
In the past, many of these reimbursements were non-taxable, but things changed after the Tax Cuts and Jobs Act (TCJA). For most employees today, reimbursed moving expenses are considered taxable income.
What Does Moving Expense Reimbursement Cover?
Typical costs that may be reimbursed:
- Professional moving company fees
- Packing and shipping household goods
- Storage fees for belongings
- Travel expenses (airfare, mileage, lodging)
- Temporary housing near the new job location
Some companies also provide a lump-sum relocation allowance, giving employees flexibility to use the funds as they choose.
Are Moving Expense Reimbursements Taxable?
This is the #1 question. Here’s the breakdown:
Comparison of Tax Rules
| Time Period | Tax Treatment | Exceptions |
| Before 2018 | Qualified moving reimbursements were generally non-taxable if job-related and met IRS distance/time tests. | N/A |
| 2018–2025 (TCJA) | For most employees, all reimbursed moving expenses are taxable and must be included on the employee’s Form W-2. | Only active-duty Armed Forces members moving under military orders can exclude them. |
| After 2025 | Unless extended, the pre-2018 rules could return. | To be determined by Congress. |
That means if your employer reimburses you $5,000 for moving today, it counts as taxable wages and increases your federal, state, and Social Security tax liability.
Example of Moving Expense Reimbursement on a Pay Stub
| Description | Amount |
| Base Salary | $3,500 |
| Moving Expense Reimbursement | $5,000 |
| Federal Income Tax Withheld | -$1,100 |
| Net Pay | $7,400 |
Here, the $5,000 is treated as taxable income, so extra taxes are withheld. This will also appear in your W-2 totals at year-end.
Why It Matters for Employers and Employees
- Employees: Need to know if their company “grosses up” the reimbursement (adds extra money to offset taxes).
- Employers: Must properly code reimbursements in the payroll register so they appear on W-2s correctly.
- Tax Planning: Impacts retirement contribution limits like 401k or Roth IRA, since taxable income increases.
- Compliance: According to the IRS Moving Expenses guide, employers and employees should keep detailed records in case of an audit.
FAQs About Moving Expense Reimbursement
Q1. Are reimbursed moving expenses taxable?
Yes, for most employees (2018–2025), they are taxable income.
Q2. Are employer reimbursed moving expenses taxable?
Yes, except for active-duty military moves under orders.
Q3. How do moving reimbursements show up on a paycheck?
They appear as an extra earnings line and increase taxable wages.
Q4. Can companies make reimbursements tax-free?
Not directly. Some employers “gross up” payments to cover the employee’s added tax burden.
Q5. Do reimbursements affect retirement contributions?
Yes — since they count as wages, they can slightly raise contribution limits for 401a and other plans.
Q6. Do I report reimbursements on my tax return?
No — they’re already included in your W-2 wages.
Q7. Are moving reimbursements different in each state?
No, federal law applies nationwide, and states follow that treatment.
Q8. What happens after 2025?
Unless extended, the law reverts, and some moving reimbursements may again be non-taxable.
Moving Reimbursement on Your Pay Stub
Since moving reimbursements are treated as taxable wages, they should appear clearly on your pay stub. Want to see how this looks in practice? Use our real pay stub generator to create professional pay stubs that show reimbursements, deductions, and net pay the right way.
