For the 2025 tax year, the tax treatment depends on whether you are a civilian employee or a member of the Armed Forces on active duty under a permanent change of station (PCS) order. Under current law, employer-provided relocation benefits are generally taxable income and included in your wages, regardless of how the funds are used.
If you are a civilian employee, you must include the relocation payment in income (typically reported on Form W-2, Box 1), and you cannot deduct moving expenses, as the deduction is suspended through 2025.
If you are a member of the Armed Forces on active duty and moved due to a PCS under a military order, you may be eligible to deduct qualified moving expenses even if you received a move allotment. However, the allotment may still be included in your taxable wages, and the deduction is claimed separately.
Moving Expense Deduction for Military Personnel
- Eligibility: Only members of the Armed Forces on active duty who move due to a permanent change of station under a military order may claim moving expense deductions.
- Deductible Expenses: You can deduct expenses such as transportation, lodging (excluding meals), and storage fees incurred during the move. If you claim storage fees while stationed outside the United States, special rules apply.
- Reporting: Report your moving expenses on Schedule 1 (Form 1040), Part II, Line 14, and complete Form 3903 (Moving Expenses) to calculate the allowable deduction.
It is important to note that if you receive relocation money from your employer, it is generally taxable income and reported on your Form W-2. If you are eligible for the military exception, you may claim a deduction for qualified moving expenses, which can offset part or all of the taxable amount, depending on your actual expenses.
Source:
Instructions for Schedule 1
Disclaimer: Always verify details with the current IRS Form 1040 and Schedule 1 instructions, as well as with your state’s Department of Revenue. For complex situations, consult a tax professional or CPA.