Legislative and Policy Analysis
Section 70113: Extension and modification of limitation on deduction and exclusion for moving expenses
Executive Summary
Section 70113 permanently continues the post-2017 limitation on moving-expense tax benefits for most taxpayers, while expanding the remaining exception beyond active-duty Armed Forces members to include certain employees and new appointees of the intelligence community who must relocate because of a change in assignment.[1]
In practical terms, most civilian workers, self-employed individuals, and employer relocation programs continue to face taxable treatment for moving reimbursements and no above-the-line deduction for unreimbursed moving costs. The main new relief is targeted: qualifying intelligence community personnel receive treatment similar to active-duty military personnel for covered moving expenses beginning with taxable years after December 31, 2025.[1]
The Joint Committee on Taxation estimated this provision would reduce federal revenues by $852 million over fiscal years 2025 through 2034, measured relative to the Senate current-policy baseline.[2] The fiscal effect is a tax expenditure rather than a direct appropriation: money does not flow through a grant or spending account, but through lower income and payroll tax collections for qualifying excluded reimbursements and deductions.
What Section 70113 Actually Does
Section 70113 changes the tax treatment of moving expenses under Internal Revenue Code sections 217 and 132. Under section 217, moving expenses historically could qualify as an above-the-line deduction when the taxpayer moved for work and met statutory distance and work-time tests. Under section 132, employer reimbursements for qualified moving expenses historically could be excluded from an employee’s gross income and wages if the expenses would have been deductible under section 217.[3]
The Tax Cuts and Jobs Act suspended those benefits for most taxpayers for taxable years 2018 through 2025, while preserving special treatment for active-duty Armed Forces members moving under military orders incident to a permanent change of station.[1] Section 70113 makes the limitation permanent after 2025 and adds a targeted exception for intelligence community employees or new appointees who relocate because of a change in assignment.[1]
| Provision component | Amount | What the financial benefit supports |
|---|---|---|
| Permanent limitation on moving-expense deduction and exclusion, with Armed Forces and intelligence community exceptions | $852 million revenue reduction over fiscal years 2025 through 2034 | Lower federal tax receipts from continued exclusion or deduction treatment for qualifying military and intelligence community relocations |
| Civilian moving-expense deduction for most nonmilitary, non-intelligence workers | Not available under the amended rule | No above-the-line deduction for most civilian moving costs |
| Employer-paid qualified moving expense reimbursement for most nonmilitary, non-intelligence workers | Taxable compensation rather than excluded reimbursement | Employers may still reimburse relocation costs, but the reimbursement generally increases taxable wages |
| Active-duty Armed Forces permanent-change-of-station exception | Not separately estimated in the public JCT line item | Preserves special treatment for covered military moves |
| Intelligence community relocation exception | Not separately estimated in the public JCT line item | Extends similar treatment to qualifying intelligence community relocations |
The provision is effective for taxable years beginning after December 31, 2025.[1]
Legislative Mechanism
Section 70113 works by amending the Internal Revenue Code rather than creating a new spending program. The key legal mechanism is a permanent change to the limitation language in section 217(k) and the related exclusion rule in section 132(g).
For deductions, amended section 217(k) provides that section 217 does not apply to taxable years beginning after December 31, 2017, except for individuals covered by the Armed Forces rule in section 217(g), and it treats qualifying intelligence community employees or new appointees who relocate because of assignment changes in the same manner as individuals covered by section 217(g).[4]
For employer reimbursements, amended section 132(g)(2) provides that the qualified moving expense reimbursement exclusion does not apply after 2017 except for active-duty Armed Forces members moving under military orders incident to permanent change of station and qualifying intelligence community employees or new appointees moving because of required assignment-related relocation.[5]
The mechanism therefore has three simultaneous effects:
- It permanently denies the moving-expense deduction for most taxpayers.
- It permanently denies the exclusion from income and wages for most employer-paid moving reimbursements.
- It preserves and expands a narrow national-security workforce exception.
Expenditure Tracking and Reporting Protocol
Section 70113 creates a federal financial effect through tax administration rather than direct spending. There is no new appropriation, grant account, procurement account, or agency transfer. The fiscal impact appears through reduced federal receipts when eligible taxpayers deduct moving expenses or exclude qualified moving expense reimbursements from income and wages.
Likely tracking sources include IRS return processing, employer wage reporting, Treasury tax-expenditure analysis, Joint Committee on Taxation revenue estimates, and CBO budget scoring. The public visibility of the section-specific effect is likely aggregated and difficult to isolate. Individual taxpayer claims are protected return information, and public datasets generally will not show a clean, section-by-section breakdown of moving-expense exclusions by employer, agency, or relocation event.
flowchart TD
A[Section 70113] --> B[IRS administration]
A --> C[Employer payroll reporting]
B --> D[Individual returns]
C --> E[Wage and withholding data]
D --> F[Treasury tax analysis]
E --> F
F --> G[JCT revenue estimates]
F --> H[CBO budget baseline]
G --> I[Public fiscal score]
H --> I
B --> J[IRS guidance and forms]
J --> K[Taxpayer compliance]
I --> L[Aggregated visibility]
The IRS is the primary administrator because taxpayers and employers apply the amended Code rules on returns, wage statements, payroll systems, and reimbursement policies. Employers that reimburse nonqualifying civilian moving expenses generally must treat those reimbursements as taxable wages. Qualifying Armed Forces and intelligence community moves may remain excludable when statutory requirements are met.[6]
JCT estimated the revenue effect in millions of dollars by fiscal year, with a total 2025 through 2034 effect of negative $852 million.[2] That estimate is the clearest section-specific public fiscal tracking source. After enactment, however, ongoing public tracking will likely be less precise because the tax effects are embedded in broader IRS, Treasury, and budget-estimating systems.
Day-to-Day Government Process Changes
For the IRS, the section continues the post-TCJA rule that most taxpayers cannot claim moving-expense deductions, while adding intelligence community eligibility to guidance, forms, instructions, and compliance systems. IRS Topic No. 455 describes moving-expense eligibility for members of the Armed Forces and the intelligence community, including how qualified taxpayers report moving expenses on Form 3903 and related individual income tax returns.[6]
For payroll administration, federal and private employers must continue treating most moving reimbursements as taxable wages unless the employee falls within a statutory exception. That affects payroll withholding, W-2 reporting, relocation-benefit design, and internal human-resources guidance.
For intelligence community agencies, the section creates a tax-relevant classification question: whether the employee or new appointee is part of the intelligence community and whether the move is pursuant to a change in assignment requiring relocation. That can require coordination among agency human-resources offices, payroll offices, relocation administrators, and employees preparing tax returns.
For the Department of Defense, the section largely preserves existing special rules for active-duty permanent-change-of-station moves. The main operational change is not to military administration, but to the broader tax system’s recognition of a similar exception for intelligence community relocation.
Effects on Consumers
The main consumer impact is on workers and households who move for employment. Most civilian workers continue to bear moving costs with no above-the-line federal deduction and generally must include employer moving reimbursements in taxable income. That can make job-related relocation more expensive, especially for workers who receive relocation assistance but face higher income and payroll tax liability because the reimbursement is taxable.
The effect is uneven. Higher-income workers may be more likely to receive employer relocation packages, while lower- and middle-income workers may face out-of-pocket moving costs without employer reimbursement. In both cases, the section keeps the tax code from offsetting most civilian relocation expenses.
Military families retain special treatment for qualifying permanent-change-of-station moves. Intelligence community employees and new appointees gain similar treatment when they relocate because of qualifying assignment changes. For those households, the section can reduce the tax burden associated with required moves and partially recognize that relocation may be a condition of public service rather than a voluntary consumer choice.
Effects on Businesses
Businesses can still pay relocation benefits, but for most employees those benefits remain taxable compensation. That increases the gross-up problem: employers that want the employee to be made whole may need to pay additional taxable compensation to offset the employee’s tax liability. Employers that do not gross up may offer a benefit that is worth less to the employee after tax.
The section may therefore affect recruiting and mobility decisions. Employers competing for specialized workers across regions may face higher relocation-program costs or reduced employee willingness to relocate. Smaller businesses may be less able to absorb relocation gross-ups than larger employers with established mobility programs.
Payroll and benefits administrators also must maintain systems that distinguish taxable from nontaxable moving reimbursements. For most private-sector employers, the rule is relatively simple: moving reimbursements are taxable. Complexity increases for federal agencies and contractors interacting with military or intelligence community personnel, where eligibility may turn on statutory status and assignment-related relocation requirements.
Environmental and Climate Impact
The environmental and climate impact is minimal. Section 70113 changes federal tax treatment of moving expenses and employer reimbursements; it does not directly fund transportation infrastructure, alter land-use rules, expand fossil-fuel activity, reduce environmental safeguards, or rescind climate or conservation funding.
The immediate legal effect is tax-based: most moving expenses remain nondeductible and most employer reimbursements remain taxable, while qualifying military and intelligence community moves receive special treatment. The reasonably foreseeable implementation effects are administrative and household-finance related, not environmental.
There may be small indirect effects on relocation behavior, commuting patterns, housing choices, or employer mobility programs, but those effects are too diffuse to characterize as a meaningful climate or environmental pathway. Existing environmental safeguards are not weakened, bypassed, compressed, or altered by this section. Environmental justice effects are also minimal because the provision does not directly change pollution exposure, public health protections, infrastructure siting, or community environmental review.
Impact Summary
Section 70113 is a tax-base and workforce-mobility provision. It permanently keeps the moving-expense deduction and employer-reimbursement exclusion unavailable for most taxpayers, while preserving the active-duty military exception and adding a targeted intelligence community exception.
For most civilian workers, the section continues a tax disadvantage for job-related moves. For employers, it keeps relocation benefits administratively taxable and potentially more expensive to gross up. For military and intelligence community households, it provides or preserves relief where relocation is tied to government assignment needs.
The federal fiscal impact is a tax expenditure, not direct spending. JCT estimated a $852 million revenue reduction over fiscal years 2025 through 2034, with public tracking likely available mainly through aggregated revenue estimates rather than transaction-level spending records.[2]
The environmental and climate effect is minimal because the section does not materially change environmental regulation, clean-energy funding, fossil-fuel development, pollution control, land use, transportation infrastructure, or public environmental oversight.
Key References and Sourcing
| Source | Relevance |
|---|---|
| Joint Committee on Taxation, General Explanation of the Tax Provisions of Public Law 119–21 | Explains present law, the Section 70113 provision, the Armed Forces and intelligence community exceptions, and the effective date. |
| Joint Committee on Taxation, JCX-29-25 Revenue Estimate | Provides the fiscal estimate for Section 70113, including the $852 million revenue reduction over fiscal years 2025 through 2034. |
| 26 U.S.C. § 217, Moving expenses | Provides the amended Code text for the moving-expense deduction and the post-2017 suspension rule. |
| 26 U.S.C. § 132, Certain fringe benefits | Provides the amended Code text for qualified moving expense reimbursements and the exclusion limitation. |
| IRS Topic No. 455, Moving expenses for members of the Armed Forces and the Intelligence Community | Describes IRS implementation guidance for qualifying Armed Forces and intelligence community moving expenses. |
| IRS, One, Big, Beautiful Bill provisions | Confirms that Public Law 119-21 affects federal taxes, credits, and deductions and was signed into law on July 4, 2025. |
[1] Joint Committee on Taxation, “General Explanation Of The Tax Provisions Of Public Law 119–21,” explanation of Section 70113 and effective date, https://www.jct.gov/getattachment/16f5eded-d2f9-425e-80a2-83a930056c38/s-1-26.pdf.
[2] Joint Committee on Taxation, “Estimated Revenue Effects Relative To A Current Policy Baseline Of Tax Provisions Contained In A Senate Substitute To Provide Reconciliation Of The Fiscal Year 2025 Budget,” JCX-29-25, Section 70113 revenue estimate, https://www.jct.gov/getattachment/458c3a40-4258-4d78-8026-f01076714895/x-29-25.pdf.
[3] Joint Committee on Taxation, “General Explanation Of The Tax Provisions Of Public Law 119–21,” present-law discussion of moving-expense deductions and qualified moving expense reimbursements, https://www.jct.gov/getattachment/16f5eded-d2f9-425e-80a2-83a930056c38/s-1-26.pdf.
[4] Legal Information Institute, “26 U.S. Code § 217 - Moving expenses,” amended section 217(k), https://www.law.cornell.edu/uscode/text/26/217.
[5] Office of the Law Revision Counsel, “26 USC 132: Certain fringe benefits,” amended section 132(g), https://uscode.house.gov/view.xhtml?req=%28title%3A26+section%3A132+edition%3Aprelim%29.
[6] Internal Revenue Service, “Topic no. 455, Moving expenses for members of the Armed Forces and the Intelligence Community,” IRS guidance on eligibility and reporting, https://www.irs.gov/taxtopics/tc455.
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