Relocation Package Calculator
What the package pays, and how it is taxed
Your result will appear here
Fill in the fields on the left and this updates as you type.
Know what this estimate is based on
- Jurisdiction
- General mathematical model
- Scope and limitations
- Educational estimate only. Confirm the assumptions, current rules, fees, and rounding that apply to your situation before making a decision.
- Source links checked
- Jul 30, 2026
Built and regression-tested by Smart Tools Lab. It has not been individually reviewed by a licensed financial, tax, or legal professional.
How to use
- 01
Enter each part of the package: the lump sum, movers and shipping your employer pays directly, temporary housing, help with selling a home or breaking a lease, and anything else such as house-hunting trips.
- 02
Enter the share of the tax your employer covers with a gross-up: 0 if none, 100 for a full gross-up. Your offer letter or relocation policy says which.
- 03
Enter your state's withholding rate and the wages you have already been paid this year, which decide how much of the package is still under the Social Security wage base and whether Additional Medicare Tax applies.
- 04
In the advanced fields, enter your real federal marginal rate and the share you would have to repay if you left early. The federal, Social Security and Medicare rates are filled in from IRS Publication 15 for 2026.
- 05
Read what the package is worth after tax, the gross-up that would make you whole, and the table showing where each dollar of tax goes.
Formula
Package value = lump sum + movers + temporary housing + home-sale help + other items. Wages = package value + gross-up. Federal withholding = 22% of wages, and 37% of any supplemental wages above $1 million in the year. State = wages × state rate. Social Security = 6.2% × the part of the wages below the $184,500 wage base after this year's earlier pay. Medicare = 1.45% × wages, plus 0.9% on wages above $200,000 in the year. After tax = wages − all withholding. The gross-up for a covered share s solves gross-up = s × tax(package + gross-up), found by bisection because the tax is itself taxed; at s = 100% the package nets exactly its own value. Withholding gap = your marginal rate × wages − federal withholding. Repayment = repayment share × wages.
Example
A new job comes with a $10,000 lump sum, $12,000 of movers and $6,000 of temporary housing paid directly, $5,000 toward selling the old home and $1,500 of house-hunting travel: $34,500, all of it taxable wages. The employee has been paid $95,000 so far this year, so the whole package is under the $184,500 Social Security wage base, and there is no gross-up. Withholding is $7,590 federal at 22%, $1,725 state at 5%, $2,139 Social Security and $500 Medicare, $11,954 in all, which leaves $22,546, or 65.3% of the package. Making the employee whole would take a gross-up of $18,293, $6,338 more than the tax on the package, because the gross-up is taxed too. At a real 24% federal marginal rate, about $690 more federal tax is due at filing. If the employee left early and had to repay all $34,500, that would be $11,954 more than the package left them after tax.
Definitions
- Supplemental wages
- Pay outside regular wages, such as bonuses and payments for nondeductible moving expenses. Employers may withhold federal tax on them at a flat 22%, and must use 37% above $1 million in a year.
- Gross-up
- Extra pay an employer adds to cover the tax on a taxable benefit. Because the gross-up is taxed too, a full one is larger than the tax on the benefit alone.
- Direct-billed expenses
- Relocation costs the employer pays straight to a mover, landlord or hotel. They are taxable wages even though the money never reaches you.
- Social Security wage base
- The most wages subject to the 6.2% Social Security tax in a year: $184,500 in 2026. Medicare has no such limit.
- Repayment agreement
- A contract requiring you to pay back some or all of a relocation package if you leave the job within a set period.
Good to know
Why moving help became taxable wages
Until 2018, employers could reimburse or pay for many of an employee's moving costs without the money counting as wages, as long as the move met distance and time tests. The Tax Cuts and Jobs Act suspended that exclusion for 2018 through 2025, and Public Law 119-21, enacted in 2025, made the suspension permanent. IRS Publication 15-B for 2026 now states that the exclusion for qualified moving expense reimbursements is permanently eliminated, with two exceptions. Members of the U.S. Armed Forces on active duty who move because of a permanent change of station under a military order can still exclude reimbursement of the moving expenses they could have deducted. And the same law extended that treatment to employees and new appointees of the intelligence community who move for a change in assignment that requires relocation; IRS Notice 2026-10 applies that to moves after December 31, 2025. For everyone else, every part of a relocation package is taxable wages. That includes the lump sum, reimbursements for receipts you submit, temporary housing, trips to look for a home, help with selling a home or breaking a lease, and payments the employer makes directly to a moving company or landlord on your behalf. The old exclusion covered payments whether they reached you or went to the mover, and with it gone both count as pay. That last point surprises many people, because direct-billed movers never pass through their bank account. On this page's example, $12,000 of movers and $6,000 of temporary housing are taxed exactly like the $10,000 lump sum, and the whole $34,500 package appears on the employee's Form W-2. The employer withholds income tax, Social Security and Medicare on it just as on salary. This is why comparing packages by their headline value can mislead. A smaller package that is grossed up can be worth more after tax than a larger one that is not. The number to compare is what reaches you after tax, which this page calculates.
How withholding on a package is worked out
Employers usually treat relocation payments as supplemental wages, the category that also covers bonuses and commissions. IRS Publication 15 for 2026 includes payments for nondeductible moving expenses in that category. When supplemental wages are paid separately from regular pay, an employer may withhold federal income tax at a flat 22%, and it must withhold at 37% on supplemental wages above $1 million paid to one employee in the calendar year. This page assumes no other supplemental pay that year and applies 37% only to any part of the package above $1 million. On top of income tax come payroll taxes. Social Security is 6.2% of wages until your wages for the year reach the 2026 wage base of $184,500. Medicare is 1.45% of all wages, and employers must also withhold the 0.9% Additional Medicare Tax on wages above $200,000 in the year. State income tax is withheld at your state's rate, and some states publish a separate flat rate for supplemental pay. On this page's example, the $34,500 package paid to someone who has earned $95,000 so far this year has $7,590 of federal tax withheld at 22%, $1,725 of state tax at 5%, $2,139 of Social Security and $500 of Medicare. That is $11,954, about 34.6% of the package, leaving $22,546. The wages already paid this year matter because of the caps. If the same employee had already earned $170,000, only $14,500 of the package would still be under the Social Security wage base, so Social Security would take $899 instead of $2,139; a little Additional Medicare Tax would apply to the part above $200,000; and the package would be worth $23,745 after tax. Withholding is not the same as the tax you owe. At a 24% federal marginal rate, the example package adds about $8,280 of federal income tax against $7,590 withheld, so about $690 more is due at filing. In a lower bracket, some of the withholding comes back.
Grossing up properly
A gross-up is an extra payment that covers the tax on a taxable benefit, so the employee keeps the benefit's full value. Many relocation policies gross up some or all of a package, and the calculation is often misunderstood. The tempting shortcut is to add the tax on the package once. On this page's example the tax on $34,500 is $11,954, so the shortcut adds $11,954. But that extra $11,954 is wages too, and it is taxed at the same rates, so the employee still falls short. Paying tax on the tax on the tax, the amounts shrink each round but never stop. The clean way is to solve for the gross-up directly. When the tax rates are flat, the full gross-up equals the package divided by one minus the combined tax rate, less the package. In the example the combined rate is 34.65%, so $34,500 divided by 0.6535 is $52,793 of wages, a gross-up of $18,293. After $18,293 of withholding on $52,793, exactly $34,500 is left. The gross-up is $6,338 more than the shortcut. Caps complicate the formula: once wages pass the Social Security wage base, that 6.2% stops, and above $200,000 the Additional Medicare Tax starts. This page therefore finds the gross-up by bisection, trying amounts until the tax on the package plus the gross-up is covered exactly, which handles every cap. A partial gross-up works the same way. If the employer covers 50% of the tax, the gross-up in the example is $7,230, the tax on $41,730 of wages is $14,459, and the employee carries the other $7,230 of it, keeping $27,270. Employer policies also differ in which items they gross up; some cover direct-billed movers and not a lump sum. And a gross-up is calculated at the flat withholding rates, so if your real marginal rate is higher, some tax will still be due at filing.
Repayment agreements and the tax trap
Many relocation packages come with strings. A repayment agreement can require you to pay back some or all of the package if you resign or are dismissed for cause within a set period, sometimes on a sliding scale. Read it before you accept, because the tax treatment of a repayment can make leaving early more expensive than the package was worth. The problem is that an agreement may ask for the gross amount, including amounts paid directly to movers and any gross-up, while you only ever received what was left after tax. On this page's example, the $34,500 package left the employee $22,546 after withholding. Repaying all $34,500 means finding $11,954 more than the package delivered. Some of that tax can come back, depending on timing. IRS Publication 15 says that if an employee repays wages received in the same calendar year, the employer can adjust the wages and recover the income tax, Social Security and Medicare it withheld. If the repayment falls in a later year, the employer can recover the Social Security and Medicare taxes and issue a corrected Form W-2c, about $2,639 in the example, but it cannot adjust the income tax withholding, because the wages were income to you in the year you received them. You then look to your own return. IRS Publication 525 for 2025 explains that a repayment of more than $3,000 of income included in an earlier year can be taken either as an itemized deduction or as a credit under the claim of right rules, whichever lowers your tax more. A repayment of $3,000 or less is not deductible at all, because miscellaneous itemized deductions are no longer allowed. Before signing, ask whether the agreement is prorated, whether it asks for the gross or the net amount, and whether it applies if the employer ends your job without cause. If you might leave, timing a repayment within the same year can matter.
Frequently asked questions
Is relocation assistance taxable in 2026?
Yes, for almost everyone. The exclusion for employer moving expense reimbursements was suspended from 2018, and Public Law 119-21 made the elimination permanent, so reimbursements, lump sums and payments made directly to movers are taxable wages. IRS Publication 15-B for 2026 lists two exceptions: members of the Armed Forces on active duty moving under a permanent change of station order, and employees or new appointees of the intelligence community moving for a change in assignment, which IRS Notice 2026-10 applies to moves after December 31, 2025.
How much tax is taken out of a relocation package?
Often about a third of it, depending on your state and the year's earlier wages. On this page's example, a $34,500 package with no gross-up is withheld at 22% federal, $7,590; 5% state, $1,725; 6.2% Social Security, $2,139; and 1.45% Medicare, $500. That is $11,954, or 34.6%, leaving $22,546, about 65% of the package. Withholding is an estimate; your return settles the real tax.
What is a relocation gross-up and how is it calculated?
A gross-up is extra pay to cover the tax on the package. It cannot simply equal the tax, because the gross-up is wages too and is taxed again. In the example the tax on $34,500 is $11,954, but a full gross-up takes $18,293, $6,338 more, so that wages of $52,793 less $18,293 of tax leave exactly $34,500. While no cap is crossed, the full gross-up is the package divided by one minus the combined tax rate, less the package. A 50% gross-up in the example pays $7,230 and leaves $27,270 after tax.
If my employer pays the movers directly, is that still taxable?
Yes. The old exclusion covered moving payments whether they reached you or went straight to the moving company, and with it gone, both are wages. That is why the $12,000 of movers and $6,000 of temporary housing in the example are taxed exactly like the lump sum, even though you never see that money.
Why is only 22% federal tax withheld on relocation pay?
IRS Publication 15 treats payments for nondeductible moving expenses as supplemental wages, which employers may withhold at a flat 22%, and must withhold at 37% on supplemental wages above $1 million in the year. The flat rate is not your tax. At a 24% marginal rate the example's $34,500 adds about $8,280 of federal tax against $7,590 withheld, so about $690 more is due when you file.
What happens with taxes if I have to repay my relocation package?
It depends on the year you repay. Within the same year, your employer can adjust the wages and the withholding. For wages paid in an earlier year, IRS Publication 15 lets the employer recover Social Security and Medicare taxes, but not the income tax withheld. You may deduct the repayment or take a credit only if it is more than $3,000; a repayment of $3,000 or less is not deductible (Publication 525, 2025 edition). In the example, repaying the full $34,500 would cost $11,954 more than the package left you, before about $2,639 of Social Security and Medicare came back.
Does Social Security tax apply to a relocation package?
Yes, until your wages for the year reach the 2026 wage base of $184,500. After that only Medicare applies, plus the 0.9% Additional Medicare Tax once wages pass $200,000. If the example worker had already been paid $170,000 this year, only $14,500 of the package would carry Social Security, $899 instead of $2,139, and the package would be worth $23,745 after tax.