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3. A Few States Allow Deductions for Moving ExpensesMost states link their tax codes to federal tax law, but a few states allow residents to take deductions on job-related moving expenses that employees have paid out-of-pocket.
While the specifics vary by state, these deductions generally include unreimbursed costs for moving household goods, as travel and mileage. To the best of our knowledge, this is the case in:
• New Jersey
• New York
Obviously, this is something to discuss with your accountant regarding your state taxes.
4. Some Home-Buying Expenses Remain Tax Deductible
More good news: if your relocation includes a home purchase, some unreimbursed closing costs are tax deductible, including:
• State and local real-estate taxes, up to $10,000
• Mortgage interest on loans up to $750,000, including some or all mortgage points
Now, many relocation policies do cover some or all closing costs, which may include mortgage points. So, once again: be sure to review this with your advisor when preparing your taxes.
5. More Tax Rule Changes Ahead!
Many provisions of the Tax Cuts and Jobs Act are scheduled to sunset on December 31, 2025, including the treatment of employer-paid relocation expenses. If no new laws are enacted between now and then, IRS rules would revert to pre-2018 status—which means paid relocation expenses would no longer be taxable to employees.
However, at this point, it’s unclear what will happen. Last fall, House Republicans introduced the TCJA Permanency Act, which as the name implies, would extend the life of the Tax Cuts and Jobs Act. Although the bill is controversial, it was reintroduced in February, 2023. We don’t really know how things will unfold.
Despite everything, one thing is clear: if you wish to relocate for a job opportunity, relocation benefits can be a gamechanger—and when an employer offers them to you, that’s an excellent sign that this employer values its people.
At that point, it’s up to you to find out what those benefits include and how to make the most of them, tax implications and all.