On Friday, December 22nd, 2017 President Donald Trump signed the tax reform bill passed by both the House and Senate. The bill contains significant changes including a repeal of the deduction and exclusion for moving expenses, effective January 1, 2018. This includes household goods shipping and the majority of final move expenses. Those expenses previously excludable will now be a taxable expense if paid for by an employer on the behalf of their employee or reimbursed to the employee.
Nothing in the bill changes the current treatment of relocation home sale programs. Costs incurred by employers/third parties in disposing of transferee homes purchased in a bona fide, fair market value transaction such as the Buyer Value Option Program or a Guaranteed Buyout Program will continue not to be taxable to the transferee.
The tax bill also includes, however, a large reduction in the corporate tax rate from 35% to 21%. There are changes to individual tax brackets as well as the federal supplemental rate (down to 22% from 25%) which may result in lower gross up costs on taxable relocation expenses. These changes may offset, at least partially, the increased cost relating to gross up on the now taxable household goods and final move expenses.
This will affect all companies who relocate employees so your CRI Client Services Representative will be reaching out to you over the next few weeks to discuss your decisions regarding tax assistance of these items and update your relocation policies. Please do feel free to reach out in the interim with any questions.
CRI appreciates your partnership as we all work through the ramifications of this far-reaching legislation.