Tax Gross-Ups Explained: What HR Teams Overlook During Candidate Relocations

Candidate relocations are already complex—but when it comes to taxable reimbursements, there’s one area where HR teams frequently fall short: gross-ups.

Gross-ups are meant to level the playing field, ensuring that relocating candidates aren't penalized for accepting a new opportunity. But when overlooked or mismanaged, they can derail the experience before day one.

Here’s what every HR and mobility team should know about tax gross-ups during candidate relocations—and how to avoid the most common (and costly) mistakes.

What Is a Tax Gross-Up?

A tax gross-up is an additional amount paid to cover the taxes incurred from a relocation benefit or reimbursement. The purpose is simple: to ensure the candidate receives the full intended value of the benefit, after taxes.

For example, if you offer a $7,500 lump-sum relocation bonus and it’s taxed at 30%, the candidate may only receive $5,250. A gross-up covers the difference—so they net the full $7,500.

Why It Matters During Candidate Relocation

For candidates—especially those moving cities, states, or countries—financial clarity and fairness are critical. If the tax impact of relocation support isn’t handled correctly, you may risk:

  • Offer rejections

  • Delayed start dates

  • Negative word-of-mouth

  • Early attrition

  • Damage to your employer brand

The candidate experience begins before day one. Getting tax reimbursements right is a vital part of making a strong first impression.

What HR Teams Often Overlook

1. Grossing Up for All Taxable Relocation Support

It’s not just lump-sum bonuses. These are often taxable too:

  • Travel and transportation reimbursements

  • Temporary housing stipends

  • Meal per diems

  • Home-finding trips

  • Pre-move visits

Failing to gross-up for these line items can leave candidates covering unexpected tax costs.

2. Using the Wrong Calculation Method

Many HR teams use flat-rate gross-ups (like 25%)—but that may fall short, especially for candidates in higher tax brackets or multiple jurisdictions.

A flat rate might look fair on paper but leave candidates owing at tax time.

3. Overlooking Local and Cross-Border Tax Impacts

If your candidate is relocating internationally or across state lines, you may need to consider:

  • Local tax rates

  • Social contributions

  • Multi-state compliance

  • International treaty rules

This adds complexity that many HR teams aren’t equipped to manage manually.

4. Lack of Documentation and Communication

Candidates are often unclear about:

  • What will be grossed-up

  • How gross-ups are calculated

  • When they’ll be reimbursed

Without transparency, even well-intentioned programs can leave a bad impression.

Best Practices for Candidate Gross-Ups

✔️ Standardize your gross-up policy
✔️ Automate calculations to reduce error
✔️ Communicate clearly with candidates upfront
✔️ Account for all taxable benefits
✔️ Partner with a provider who understands global compliance

How Orion Mobility Solves This

At Orion, we specialize in removing the friction and risk from gross-up processing. For candidate relocations, our solution includes:

  • Smart gross-up calculations based on real tax data

  • Configurable relocation packages that adapt to taxable items

  • Transparent breakdowns for both HR and the candidate

  • Global compliance and audit-ready documentation

  • Seamless integration with payments and reimbursements

We make sure candidates start on the right foot—and your team stays protected.

Final Takeaway

Tax gross-ups aren’t just a finance issue. They’re a talent issue.

When handled poorly, they can erode trust, create delays, and damage your brand. When done right, they build confidence, clarity, and momentum—before your new hire ever walks through the door.

Want to simplify your candidate relocation experience?

Connect with our team to learn how Orion Mobility streamlines gross-ups and ensures tax-compliant, candidate-friendly relocations.

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What Is a Tax Gross-Up — and Why Most Companies Get It Wrong