The state of Massachusetts may retain deduction for moving expenses that the 2017 Tax Cut and Jobs Act (TCJA) eliminated at the Federal level. According to the Massachusetts Revised Working Draft TIR 19-XX: Impact of Selected Provisions of the Federal Tax Cuts and Jobs Act on Massachusetts Personal Income Tax under Chapter 62 published on April 1, 2019:
Section B., “Amendments to which Massachusetts does not conform for the purposes of G.C. c. 62,” notes in sub-section III that the exclusion from gross income afforded under IRC § 132(a)(6) and (g) and the deduction allowed under IRC § 217 are still allowable for eligible Massachusetts taxpayers.
What does the 2017 Tax Cut and Jobs Act Require?
Beginning in 2018, the TCJA requires the following changes:
- Eliminates the deduction for moving expenses
- Unreimbursed moving expenses are also not deductible
- Employer reimbursed moving expenses are:
- Not deductible (this is the basis for Massachusetts choosing to retain deduction)
- Included in income
- Taxable to the taxpayer
What is the Impact of Massachusetts Choosing to Retain Deduction for Moving Expenses?
Massachusetts taxpayers may benefit from the state choosing to retain deduction for moving expenses. These taxpayers may also benefit from the state choosing to exclude moving expenses from gross income calculations. Governor Charlie Baker signed the state of Massachusetts’ Fiscal Year 2019 budget into law in July 2018. The plan supports his administration’s full commitment to balancing the state budget from a structural standpoint. Since Massachusetts currently has a healthy budget status, the ability to retain deduction for moving expenses should not materially impact state finances.
What Should Employers do Since Massachusetts is Choosing to Retain Deduction?
Employers in the state of Massachusetts should keep aware of changes to local tax laws. They should highlight the state’s interest to retain deduction for moving expenses to new hires and transferees. This is a favorable benefit for those choosing to relocate to Massachusetts.
Massachusetts has a need for workers. Recently Massachusetts had the largest construction worker shortage in the United States. Employers should work with a qualified Relocation Management Company (RMC) that has the experience and knowledge to help them understand how to leverage tax law changes for their relocation program.
Conclusion
GMS’ team of global relocation experts has helped thousands of our clients understand how local tax laws may impact their relocation programs. Our team can help your company determine how to highlight the benefit of Massachusetts choosing to retain deduction for moving expenses to new hires and transferees.
GMS was the first relocation company to register as a .com. The company also created the first online interactive tools and calculators, and revolutionized the entire relocation industry. GMS continues to set the industry pace as the pioneer in innovation and technology solutions with its proprietary MyRelocation™ technology platform.
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Contact our experts online to discuss your company’s relocation program and ways to highlight Massachusetts choosing to retain deduction for moving expenses, or give us a call at 800.617.1904 or 480.922.0700 today.
Sam Hoey | CRP, GMS
Senior Vice President, Global Account Management Sam joined Global Mobility Solutions in 1996 and has a unique perspective with her 25 years of industry experience. Samantha offers her clients relocation expertise and a commitment to excellence in her. Her proficiency in orchestrating the BVO and GPO Programs, as well as relocation policy design and implementation, are invaluable assets to the accounts she manages. Her experience in administering Pre-Decision Relocation services to enhance the recruiting process further demonstrates her unique abilities to service her clients. Samantha’s diverse experience, leadership, and outstanding communication skills enable her to manage the relocation process for her clients with finesse and polished professionalism.
