Massachusetts Proposes to Retain Moving Expense Deduction / Exclusion

Since enactment of the 2017 Tax Cuts and Jobs Act (TCJA) in 2017, which—among other changes—suspended the deduction and exclusion for moving expenses for the years 2018 through 2025, states have been grappling with whether to adopt that change for state purposes as they work on conforming their state laws to the federal law.

Massachusetts is a state that selectively conforms to the Internal Revenue Code on a “static” basis; that is, each time the federal law is changed, the state must enact a new conformity date if it wishes to adopt the new federal law.

As of April 2019, the state has not yet formally acted with respect to the TCJA. However, the state revenue department has produced working drafts of a technical information release that describes which of the TCJA provisions will and will not be adopted by the state. The latest, which was released on 1 April 2019, says the state will not adopt federal changes to the moving expense deduction and exclusion, both of which are allowable under current Massachusetts law. See https://www.mass.gov/technical-information-release/revised-working-draft-tir-19-xx-impact-of-selected-provisions-of-the.

Currently, Massachusetts adopts sections 132 and 217 of the federal code (the sections that provide the moving expense exclusion and deduction) as they were in effect on January 1, 2005. According to the draft TIR, the state does not intend to alter that position despite the TCJA. Therefore, it appears that moving expense payments and reimbursements will remain excludable in Massachusetts.

How This Impacts Mobility

Worldwide ERC® members with Massachusetts transferees will be able to continue to exclude reimbursements and payments for moving expenses from the Massachusetts income of those employees, which will reduce necessary state tax gross-ups.

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