Adjusting Relocation Policies for the Tax Cuts and Job Acts of 2017

January 15, 2019

The Tax Cuts and Job Acts of 2017 was signed into law on December 22, 2017, and it’s changing the way many companies handle their relocation policy and how they compensate their employees.

According to our report, “The State of Employee Relocation 2018”, HR leaders are struggling to tackle the challenges these new regulations present, even though the new regulations were put into place over a year ago. “Nearly 62% [report] they feel increased pressure to save transferees and their organization’s money,” however, “less [than] 1⁄3 have implemented changes to their relocation policies.”

How does the job act affect the way that you relocate your high-performing employees? Read on to discover more about the Act and learn how you can adjust your policies to optimize relocation outcomes.

How It’s Changing Relocation

In the past, when an employee received reimbursements for relocation it could either be used as a tax-free perk or treated as an above-the-line deduction. If they used it as a deduction, it entitled them to certain tax breaks even if they didn’t itemize. This is sometimes referred to as adjustments to income.

Before the implementation of the Tax Cuts and Jobs Act of 2017, employment relocation expenses were tax deductible.

The employee had to meet three requirements to qualify for this deduction:

  • The new job must be located at least 50 miles further from the employees home than the old job
  • The employee must work full-time for at least 39 weeks during the first year on the new job
  • The move had to be related to the new job.

All of this changed with The Tax Cuts and Job Acts of 2017. Many of the deductions that individuals were able to make in the past are no longer allowed. Now, employees cannot use relocation payment as a tax-free perk or as an above-the-line deduction with the exception of military-related moving expenses. This Act is in place for taxable years 2018-2025. Payments made to employees in 2018 for relocation in 2017 can be excluded from employees’ wages and are not subjected to taxes.

Beginning this past year, this deduction for moving expenses was eliminated. Meaning, an employee’s reimbursed funds for moving is now included in income and taxable to the employee. As a result, the employee loses a major incentive for committing to relocation.

What This Means for Your Company

Now, companies face a dilemma for finding the best way to relocate high-performing employees that can benefit both themselves and the employee they want to relocate. Employers are looking for ways to reduce moving costs so employees don’t miss a large tax benefit.

Read our blog, “The Secret to Moving on a Budget”

With these changes, it makes sense for companies to now enlist moving labor for their employees’ relocation. Some of the benefits of choosing the right company to help with your relocation include:

Reduce expenses: The right moving company will help to reduce your cost and time to make the move run as smoothly as possible. Now that employees are held liable tax-wise for any expenses that they run into during relocation, they will also be trying to find a way to reduce the cost of the move. The right moving services will be cost effective for both you and your employee.

Offer convenience: In addition to lowering your costs, the right moving company will understand your business and tax needs and offer the most convenient billing to suit your needs.

Streamline operations: Your business needs to know what to expect. By engaging one company, you can anticipate how much it will cost and how long it will take. The right moving company will provide the consistency you need to plan the relocation.


By engaging with the right moving company, you will find the affordability, convenience, flexibility, and consistency to make the process of relocating your high-performing employees as smooth and seamless as possible.

Simple Moving Labor offers the convenience and flexibility that will make navigating the new tax laws easy for both you and your employee. If you need an affordable and fast service to relocate your employees, request a quote today!

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