Moving to Woodland Hills for a New Job? Your Relocation Package Isn't Tax-Free Anymore

Jonathan Lopez, Woodland Hills Realtor | Jim Sandoval Group | CA DRE #02282844 · Updated September 2026

If you're relocating to Woodland Hills for a new job, whatever your new employer told you about covering your moving costs is worth a second look, because the tax rules changed under you in 2026, and most relocation offers haven't caught up. For years, workers assumed employer-paid moving expenses were a tax-free perk. As of this year, for the vast majority of movers, that's no longer true.

A Quick History, Because The "Why" Matters Here

Before 2018, the Internal Revenue Code allowed two related tax breaks: Section 217 let a worker deduct reasonable, unreimbursed moving expenses on their own return, and Section 132(a)(6) let an employer reimburse those same costs without the reimbursement counting as taxable income to the employee. The 2017 Tax Cuts and Jobs Act (TCJA) suspended both breaks, but only temporarily, through the end of 2025, with an exception carved out for active-duty military members moving under a permanent-change-of-station order. Because the suspension had a sunset date, plenty of workers and HR departments assumed the old tax-free treatment would simply come back in 2026.

It Didn't. It's Gone For Good

The One Big Beautiful Bill Act (OBBBA), signed into law in 2025, addressed this directly in Section 70113. Rather than letting the TCJA's suspension expire, it made both Section 217(k) and Section 132(g)(2), the provisions suspending the deduction and the exclusion, permanent parts of the tax code. Per Foster Garvey's own legal analysis of the Act's text: "the moving expense deduction under Code Section 217 and the employer-reimbursed moving expense exclusion under Code Section 132 are not coming back to life in 2026. Unless lawmakers act, they are dead." The law firm's analysis also confirms one new wrinkle: the OBBBA extended the military exception to cover intelligence community employees relocating under a change of station as well, but that's the full extent of who's still exempt.

What This Actually Means For Your Paycheck

If your employer pays your moving expenses directly, whether that's a lump-sum "relocation bonus," a check to the moving company, or covering a few weeks of temporary housing while you house-hunt, the full amount now has to be added to your W-2 as taxable compensation. It's subject to ordinary income tax withholding at your normal rate, plus Social Security and Medicare payroll taxes, exactly like the rest of your salary. And because the worker-side deduction is also permanently gone, there's no offsetting write-off if your employer doesn't reimburse you at all and you pay your own moving costs out of pocket.

A Concrete, Illustrative Example (Not A Personalized Tax Estimate)

Say a new employer offers a $20,000 lump-sum relocation bonus to help cover your move to Woodland Hills. At a combined federal, state, and payroll tax rate in the neighborhood of 30% for a mid-to-upper income earner in California, roughly $6,000 of that $20,000 disappears to withholding before it ever reaches your moving budget, leaving closer to $14,000 in actual spending power. Five years ago, that same $20,000 offer would likely have arrived tax-free in full. That gap is exactly what catches relocating buyers off guard when they build a house-hunting budget around the number HR quoted them, rather than the number that actually lands in their account.

The One Lever You Actually Have: Ask About A "Gross-Up"

Some employers, particularly larger companies running formal relocation programs, already build a "tax gross-up" into their packages: they calculate the expected tax hit and increase the reimbursement enough that the employee still nets the intended amount after taxes. This has become more common precisely because of the TCJA's original 2018 change, but it is not universal, and it is far less likely to be offered by default on a smaller, lump-sum-only relocation offer. If you're negotiating a move to Woodland Hills for work, asking directly whether the relocation package is grossed up for taxes, and getting the answer in writing, is a legitimate, normal question to ask during an offer negotiation, not an awkward one.

Why This Matters Specifically For A Woodland Hills Home Search

With Woodland Hills' current median sale price at $1,348,500 (Movoto, updated September 2026) and 390 active listings on the market, relocating buyers already have real numbers to plan around for the purchase itself. The relocation-package tax change adds a second number that matters just as much: the actual, after-tax dollars available for a down payment, moving costs, or a housing gap during the transition, which may be meaningfully smaller than the pre-tax figure in an offer letter. Building a home search budget around what a relocation package nets after taxes, not what it was quoted as before taxes, avoids a real and increasingly common surprise for anyone moving to the area for a new job in 2026 or later.

This Isn't A Rare Situation In West Woodland Hills Specifically

The area sits within commuting distance of several sizable employers, including the Kaiser Permanente Woodland Hills Medical Center and a mix of finance, healthcare, and entertainment-adjacent offices throughout the San Fernando Valley, which means a steady stream of buyers relocating here for a new role rather than moving within the same metro. For someone coming from out of state with a job offer in hand, the relocation package is often the single largest source of move-related cash they're counting on, which makes this exact tax change more consequential here than it might be for a purely local move across town, where relocation assistance is rarely part of the picture at all.

Timing Matters Too

Because this change took effect starting with the 2026 tax year, anyone who relocated and received reimbursement in 2025 under the old TCJA suspension rules was still covered by the prior temporary treatment for that tax year, but anyone relocating and receiving employer-paid moving costs from January 1, 2026 onward is subject to the new, permanent rule with no exceptions beyond the two named above. If you're currently negotiating a start date and a relocation package with a new employer, when the reimbursement actually gets paid out, not just when you sign the offer, is what determines which tax treatment applies to your specific situation. This is the kind of timing question worth pairing with the practical logistics covered in what closing on a Woodland Hills home actually looks like when you're relocating from out of state, since both the tax treatment and the closing timeline hinge on dates, not just dollar amounts.

The bottom line: the old assumption that a corporate relocation package arrives tax-free no longer holds for almost anyone outside active-duty military and intelligence community employees. Knowing that before accepting an offer, or before finalizing a home-search budget around it, is the difference between an accurate plan and an uncomfortable surprise on your first paycheck after the move.

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