Can you deduct moving expenses for a military move?
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NATP Staff
Moving for work has long been associated with tax breaks, but for the 2026 tax year, that assumption is largely outdated. The One Big Beautiful Bill Act (OBBBA) permanently eliminated the federal moving expense deduction and the exclusion for employer-reimbursed moving expenses for most taxpayers. These changes are no longer temporary, making it critical for tax professionals and taxpayers alike to understand the new landscape and avoid costly mistakes.
Who still qualifies?
For 2026, the moving expense deduction is off the table for nearly everyone except a select few. The deduction is now limited to active-duty members of the U.S. Armed Forces who move due to a military order and a permanent change of station (PCS). OBBBA also carved out a narrow exception for certain intelligence community members, but the rules closely mirror those for the military.
Checklist: Determining eligibility and compliance
1. Confirming eligibility:
- Is the taxpayer an active-duty member of the U.S. Armed Forces or a qualifying intelligence community member?
- Was the move required by a military order or qualifying directive?
- If not, stop here: No deduction or exclusion applies, and any employer reimbursement is taxable.
2. Verify the move qualifies:
- Does the move meet the PCS requirement? (e.g., home to first post, one permanent post to another, or last post to home/closer U.S. location)
- For multiple PCS moves in a year, is there a separate Form 3903, Moving Expenses, prepared for each?
3. Identify qualified expenses:
- Are expenses limited to moving household goods and personal effects?
- Are travel expenses (transportation, lodging) from old home to new home included?
- Are vehicle expenses calculated using actual costs or the standard mileage rate?
- Are meals excluded from the deduction?
4. Substantiate and document:
- Is there documentation for all expenses?
- Are travel and lodging expenses reasonable, necessary and directly related to the move?
- Is the mileage method clearly documented and supported?
5. Reconcile reimbursements:
- Did the government provide moving/storage services?
- Are military allowances properly reviewed and applied?
- For employer reimbursements, is the taxpayer ineligible?
- For eligible taxpayers, is a reconciliation worksheet prepared to compare qualified expenses to reimbursements?
- Is any excess reimbursement included in income, and are unreimbursed qualified expenses properly deducted?
6. Final filing review:
- Is Form 3903 prepared only for eligible taxpayers?
- Are expenses paid directly by the government properly netted out?
- Is all supporting documentation complete and organized?
What expenses are still deductible?
For those who qualify, deductible moving expenses are strictly defined. Only the cost of moving household goods and personal effects, as well as travel (excluding meals) from the old home to the new home, are allowed. Vehicle expenses can be calculated using actual costs or the standard mileage rate, but all must be substantiated with clear records.
How are reimbursements treated?
This is a common pitfall. If the government provides moving services for a PCS move, those are not taxable. However, for most taxpayers, employer-paid or reimbursed moving expenses are now permanently treated as taxable compensation. Even for eligible taxpayers, any excess reimbursement above qualified expenses must be included in income, while unreimbursed qualified expenses may be deductible.
Bottom line
For 2026, moving expenses are a narrow exception, not the rule. Tax professionals who use a clear, step-by-step checklist can help clients avoid incorrect assumptions and ensure compliance in a landscape that now favors inclusion over deduction.
By following this checklist, tax professionals can confidently guide clients through the new rules and avoid costly errors in the 2026 tax year.
About the author(s)
NATP Staff