A relocation package typically covers the household move, temporary housing for a limited period, and travel. It rarely covers a loss on selling a home, a spouse's lost income, or a lease break. The decisive question is tax: for tax years beginning in 2026 employer-paid relocation is taxable wages for civilian employees, so a package is worth its headline figure only if the employer grosses it up.
The tax change most people have not caught up with
The exclusion that once let employers reimburse qualifying moving costs tax free was suspended from 2018 and has since been made permanent, with narrow exceptions for active-duty military moves under orders and certain intelligence community relocations. For everyone else, every dollar of relocation support is reported as wages.
So the question that decides what a package is worth is short: is it grossed up? A grossed-up package means the employer also covers the tax, so the headline figure survives. Without a gross-up, a five-figure package can lose a large fraction to withholding before it does any work.
What is usually in
Packing and shipping household goods. Travel for you and your household to the new location. Temporary accommodation, normally capped at a number of days. Sometimes a house-hunting trip, and sometimes storage.
What is usually out
A loss on selling your home. Breaking a lease. A partner’s lost income or job search. Duplicate housing costs beyond the temporary period. Anything to do with pets, vehicles or specialist items unless named.
Lump sum against managed
A lump sum is simple, flexible and leaves the risk with you: overspend and you absorb it. A managed relocation, where the employer contracts the movers directly, removes the risk and the flexibility together. Neither is better in the abstract; a lump sum suits a small, predictable move and a managed program suits a complicated one.
The clawback
Most packages are repayable if you leave within a stated period, commonly a year or two, sometimes on a sliding scale. That is a real commitment attached to a benefit, and it belongs in the decision rather than in a surprise letter.
The four questions
Is it grossed up. What exactly is covered, in a list. How long is temporary housing. And what is the repayment obligation if I leave. All four are answered in writing before you accept, or they are answered expensively afterwards.
Common questions
Is relocation assistance taxable?
For tax years beginning in 2026, yes for civilian employees — it is reported as wages. The remaining exclusions are narrow, covering active-duty military moves and certain intelligence community relocations.
What does grossed up mean?
The employer also pays the tax on the relocation benefit, so the headline figure survives. Without it, a large part of a package disappears to withholding.
What is usually not covered?
A loss on a home sale, breaking a lease, a partner's lost income, and duplicate housing beyond the temporary period.
Lump sum or managed move?
A lump sum gives flexibility and leaves the overspend risk with you. A managed move removes both. Small predictable moves suit the first.
Do I have to pay it back if I leave?
Usually within a stated period, often a year or two and sometimes on a sliding scale. Get the exact terms before accepting.