The Big Tax Deduction You Can Get If You Work In The Military

Before 2018, if you had to move for a job, you could often lower your tax bill by deducting your moving costs. However, things changed with the 2017 Tax Cuts and Jobs Act and now, until at least the end of 2025, most people are no longer able to deduct these expenses. The exception? Active-duty military members. If military members and their families must move due to military orders necessitating a permanent change of station (PCS), they can take advantage of this important tax break. This exception helps military families handle the frequent moves that come with military life. While PCS moves are a routine part of military service, these moves can be expensive and unsettling. While there can be a lot of important tax deductions to know, this particular one can help make your frequent moves a bit easier — financially at least. 

However, it's important to realize who, exactly, qualifies for this benefit and how it works. For starters, only those who are active duty members of the Armed Forces, Uniformed Services of the United States, or other supporting organizations working in a combat zone are eligible for military tax benefits. Next, a PCS order must be the precipitating reason for the move – as opposed to a personal decision. If you meet the previous two qualifications, it's important to keep in mind that this tax break only applies to expenses not already reimbursed by the military.

Another consideration is knowing what specific expenses qualify. Some out-of-pocket expenses include the transportation of household items and personal effects — this covers the cost of packing, renting moving vans, hiring professional movers, shipping costs, and even the transportation required from your old residence to your new one. If you use your personal vehicle to move, you can also claim a mileage deduction, either by the standard mileage rate — which is 21 cents per mile (but this is subject to annual changes)– or by deducting actual travel expenses. Keep in mind that calculating actual expenses can include gas, oil, and other related costs. In either case, you should keep a complete record of your spending through both receipts and a mileage log, in addition to making sure you keep an eye on how new 2025 income brackets and deductions might affect your taxes.

While military personnel can deduct expenses like hotel stays during the move and the costs of storing and insuring household items for up to 30 days after relocating, food and meal expenses are not included. Make sure to subtract any military reimbursements when calculating your deductions and keep all your moving receipts and records. These are crucial to proving your expenses in case the IRS has questions. Also remember that you can't deduct moving costs if your employer covers them. However, if your employer's reimbursement is included in your taxable income, you can then deduct those expenses on your taxes. For more details, consult IRS Form 3903.

When using IRS Form 3903 to calculate and report your deductible moving expenses, remember that these expenses get reported on Schedule 1 (Form 1040), and that they can and do adjust your gross income. This can reduce your taxable income and potentially lower your tax burden. Remember, the IRS pays close attention to deductions, so it's important to keep your records accurate and current. Also, keep in mind that some states have different rules about moving expense deductions. Be sure to check your state's tax guidelines to find out about any additional benefits or requirements you need to know.

While you might question if turning to a tax professional is worth it – having someone who knows the ins and outs of military tax rules can really smooth out your tax filing process and help you snag all the deductions you deserve. Similarly, some online tax software options might be a more affordable choice for those looking for extra help. These resources are designed to guide you through each step and make sure you're squeezing every benefit out of the tax laws related to military moves. Regardless of your approach, getting a handle on which costs are deductible and how to claim them can significantly trim down your tax bill and lighten the financial load of your moves.