Massachusetts Rejoins the List of States Allowing a Moving Expense Deduction
For most employees, moving expenses haven't been deductible at the federal level since 2018 except for qualified military moves, and the One Big Beautiful Bill Act in 2025 made that suspension permanent. But federal rules and state rules don't always match. A handful of states have chosen to keep the pre-2018 federal standard in place for their own tax purposes, allowing certain moving expenses to be deducted or excluded even though they no longer qualify federally.
Massachusetts has just become the latest state to take this approach.
What changed
On June 24, Massachusetts issued Technical Information Release TIR 26-4, addressing how the state will conform to certain provisions of federal Public Law 119-21 following a recently enacted supplemental budget. As part of that update, Massachusetts will once again allow the deduction or exclusion of qualifying moving expenses, specifically shipment of household goods, up to 30 days of storage, and certain final move costs, for all transferees, not just qualified military moves. This treatment applies starting with the 2026 tax year.
This isn't entirely new ground for the state. Massachusetts allowed this same deduction and exclusion in the past before discontinuing it a few years ago. With this update, it's back in effect.
Where this leaves the state list
Massachusetts now joins six other states that continue to allow the deduction or exclusion of certain moving expenses for all transfers: Arkansas, California, Hawaii, New Jersey, New York, and Pennsylvania. That brings the total to seven states applying this treatment, while the federal rule and most other states continue to follow the post-2018 standard, which limits the deduction or exclusion to qualified military moves only.
Why this matters for mobility and payroll teams
State and federal tax treatment of relocation costs don't always move in the same direction, and this is a good example. For companies relocating employees to or from Massachusetts, this change affects:
How moving-related reimbursements should be coded and reported on state W-2 filings
Whether certain costs can be excluded from state taxable wages rather than grossed up
Gross-up calculations for Massachusetts-based transferees starting in 2026
As always, employees should be careful not to claim a deduction for any moving cost that was reimbursed by their employer, unless that reimbursement was included in their state wages. Coordination between mobility, payroll, and tax teams will be important to make sure Massachusetts moves are coded correctly going into the new tax year.
A reminder to keep checking
State conformity to federal moving expense rules can change from one budget cycle to the next, as Massachusetts's history shows. Companies with employees in any of these seven states should build a periodic check into their relocation tax processes rather than assuming current treatment will hold indefinitely.
For full details, see the state's release: TIR 26-4: Massachusetts Conformity to Certain Provisions in Public Law No. 119-21