A bipartisan group of senators last week introduced legislation to close a loophole that prevents certain federal workers from having additional taxes on their moving expenses fully reimbursed.
The Tax Cuts and Jobs Act of 2017 eliminated the deduction for job-related moving costs, as well as the exclusion for reimbursements or in-kind contributions made by employers to defray the cost of moving. As a result, employer reimbursements for moving costs – which were previously excluded – are now generally taxed at the same rate as ordinary income. This situation is causing a particular burden for civilian federal employees who, after being assigned to a new duty station, have discovered that hundreds or even thousands of dollars have been withheld from their paychecks, often with little advance notice, in order to cover the cost of taxes associated with moving reimbursements from the federal government.
“Civilian federal workers uproot their entire lives and move to distant locations in service to their country. They shouldn’t have to pay a price for their commitment to public service,” said Senator Mark Warner (D-VA). The Relocation Expense Parity Act ” closes a remaining gap that prevents all federal employees from being fairly compensated for their willingness to serve our country,” Warner said.
Several groups representing federal employees have praised the bill, including: the FBI Agents Association, the Federal Education Association, the National Treasury Employees Union (NTEU) and the National Active and Retired Federal Employees Association (NARFE).