Back in the day, the 50 Mile Rule was an important part of employee relocation policies. It was used to determine the taxability of some employee relocation costs. However, the Tax Cuts and Jobs Act of 2017 (TCJA) changed everything.
Before the TCJA, the now outdated 50 Mile Rule meant the transferee’s new principal workplace had to be at least 50 miles farther from their old home than their former workplace. When a transferee satisfied the IRS criteria (including the 50 Mile Rule), their employer could pay the cost of their household goods shipments and final trip travel, treating it as a business expense, without the need to report it as taxable compensation. But because of the TCJA, these formerly excludable moving expenses are now taxable – regardless of whether employees meet the old 50 Mile Rule criteria (except for active duty Armed Forces changing duty stations).
While the 50-mile Rule currently has no bearing on taxability for corporate relocations, some employers have elected to adopt it as a company rule in determining eligibility for relocation benefits. But, with many current tax regulations expiring in 2025, the 50 Mile Rule may just make a return…. So stay tuned to see what happens in 2026! As always, MoveCenter will continue to monitor and keep our clients updated.
If you have questions about the Tax Cuts and Jobs Act and its impact on your global mobility program, please contact MoveCenter at 888-668-3411 or info@movecenter.com.
