While there are several differences between the House and Senate bills, both measures increase the upfront cost of relocation and are expected to increase an employee’s reluctance to relocate.  At the same time, the corporate “after-tax” return on investment (ROI) provided by each relocation investment should increase.
We expect the differences will be resolved and new legislation will be enacted with an effective date of January 1, 2018. 
The changes affecting relocation include:  
  • Moving Costs that are currently excludable including the cost to transport an employee’s household goods and the cost of the employee’s and/or family’s travel to the new location will no longer be deductible except when related to the move of a member of the Armed Forces of the United States who is on active duty and complying with a military order.  
  • Payment or reimbursement of an employee’s moving costs will be considered taxable compensation to the employee unless related to the move of a member of the Armed Forces of the United States who is on active duty and complying with a military order. 
  • The deductibility or excludability of other amounts that impact an employee’s “cost of living” will be reduced and possibly eliminated.  
  • Reduced corporate tax rates will improve the “after-tax” ROI generated by an investment in an employee’s relocation. 
We recommend companies review existing relocation policies as soon as possible with the intent to estimate the financial impact and take appropriate steps to maintain budgetary compliance wherever possible.