The world of corporate mobility—HR pros, finance executives, corporate relocation teams, and senior executives—are charged with evaluating options and implementing significant changes to corporate mobility policies and budgets in light of the tax reform signed into law in late 2017. Effective January 1, 2018, the Tax Cut and Jobs Act, impacts both corporations and individual taxpayers in a myriad of ways.
One major change that you are no doubt aware of, is that in spite of a concerted lobbying effort by the industry, the household moving expense deduction was entirely eliminated by the tax reform act. This is certain to result in a significant increase in gross-up amounts for transferees and new hires, for whom moving expense reimbursements will now be considered taxable income.
In addition to the elimination of the moving expense deduction, the modifications of the child tax credit, and the Alternative Minimum Tax considerations that may result in increased gross-ups, especially for high-earning employees, will all likely impact organizations and their corporate mobility programs and require an immediate revamp of existing policies and programs.
Another significant impact on transferees brought about by the new tax laws are the limitations on deductions on interest for mortgage debt. This, combined with the newly imposed $10,000 cap on state and local tax deductions (including mortgage interest), could have a considerable effect on employees transferring to some of the more expensive real estate markets and/or high-income earners.
Organizations will need to make decisions regarding tax support for the many ways in which a transferee might be impacted by a corporate relocation. It’s important to note these decisions may well impact an employee’s ability or willingness to relocate and they may also impact talent recruitment efforts in an already competitive job market.
Note that the tax reform bill retains moving expense benefits for members of the Armed Forces of the U.S. military, where the move is due to a permanent change in military status.
To assist with your efforts in navigating changes to your corporate mobility program and policies necessitated by the 2018 Tax Reform, our team at northAmerican has created this comprehensive Guide, 2018 Tax Reform: What Corporate Mobility, HR Pros & Senior Executives Need to Know.
Download the Guide now, review your existing corporate mobility program and identify the provisions that need to be revised in light of these changes. This Guide is intended as a resource—always be sure and check with your corporate tax counsel before making any final changes. Know that along the way, our team is here to help in any way that you’d like.
Access the Guide Here: 2018 Tax Reform - What Mobility and HR Pros Need to Know