Virginia Conforms to Tax Reform; Moving Expenses Still Deductible in 10 States

3.14.19 | Moving expenses are no longer deductible/excludable in Virginia as the state reverses earlier legislation and conforms to the Tax Cuts and Jobs Act (TCJA) of 2018. Except for military moves, relocation expenses are not deductible on 2018 Virginia tax returns.

The following 10 states still allow the deduction/exclusion for 2018:

  • Arizona
  • Arkansas
  • California
  • Hawaii
  • Iowa
  • Massachusetts
  • Minnesota
  • New Jersey
  • New York
  • Pennsylvania

What does this mean?

For Virginia-based relocations, employers should revisit gross-ups if they were calculated based on the deductibility of moving expenses. Without the deduction/exclusion, transferees filing in Virginia will have an increased tax liability. Within the 10 aforementioned states, relocation-related expenses will be managed as they were prior to the reform.

As of 2019, Iowa has conformed to the TCJA and moving expenses will not be deductible this time next year.

Our Advice

Ensure moving-related reimbursements are properly managed based on each employee’s state of filing. Contact the person or organization managing your gross-ups to assess your situation, adjust as needed, and proactively manage potential issues.

Questions? Contact our experts.

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