Tax Changes for Moving and Relocation Expenses

A person carrying a moving box

With the enactment of the Tax Cuts and Jobs Act of 2017 (TCJA), U-M is required to modify its practice with respect to providing tax-free reimbursements of qualified moving expenses.

As of January 1, 2018, qualified moving expenses incurred by employees are no longer excluded from taxable income.  Further, as of July 1, 2018, the tax-free reimbursement of qualified moving expenses is suspended.

Due to this change in the federal law, moving expenses incurred by employees after January 1, 2018, will be treated as wages and paid through the Payroll Department subject to federal, state and FICA tax withholding. Employees may not deduct these expenses on their individual income tax returns.

U-M will continue to reimburse on a tax-free basis those non-taxable moving expenses incurred by employees during calendar year 2017 as long as they are submitted for reimbursement to the Shared Services Center by April 17, 2018.  Faculty and staff who incurred moving expenses during 2017 must submit their reimbursement claim to the SSC by April 17, 2018, to receive tax-free reimbursements.  Nothing needs to be done if reimbursements have already been submitted.

SPG 201.68, Moving and Relocation Expenses, has been updated to address these changes. 

Questions about this policy can be directed to UHR Staff Human Resources Services.