Temporary work assignments: when relocation pay is taxable

The rule in the publication

Publication 15-A (2026) addresses an employee given a temporary work assignment away from their regular place of work. Certain travel expenses that the employer reimburses or pays directly, in accordance with an accountable plan, may be excludable from the employee’s wages. The test for a temporary assignment in a single location is that it is realistically expected to last, and does in fact last, for one year or less. If the new assignment is indefinite, any living expenses reimbursed or paid by the employer must be included in the employee’s wages as compensation. The publication carves out qualified moving expenses paid to a member of the U.S. Armed Forces on active duty who moves because of a permanent change of station due to a military order, and to certain employees or new appointees of the intelligence community who move under a change in assignment requiring relocation.

The three conditions for exclusion

Even when the assignment is temporary, the exclusion is not automatic. The publication lists three conditions, each of which must be met. The new work location must be outside the city or general area of the employee’s regular workplace or post of duty. The travel expenses must otherwise be allowed as a deduction by the employee. And the expenses must be for the period during which the employee is at the temporary work location. If any one fails, the reimbursement is wages. For the underlying deduction rules, see Chapter 1 of Publication 463, which the publication names, and section 5 of Publication 15 for what makes a reimbursement arrangement an accountable plan.

Two timing tests, not one

Notice that the one-year test has two parts. The assignment must be realistically expected to last one year or less, and it must in fact last one year or less. An assignment that is expected to last eight months at the start but runs to fourteen fails the second part; an assignment that is expected to last two years fails the first part on day one. The checker takes both numbers for that reason.

Personal expenses are always wages

The publication adds a clear rule. If you reimburse or pay personal expenses of an employee during the temporary work assignment, such as expenses for home leave for family members or for vacations, these amounts must be included in the employee’s wages. These rules generally apply to temporary assignments both inside and outside the United States.

A worked illustration

An employer sends a project manager from Chicago to a client site in Denver for nine months, expected from the start to last about nine months. Denver is outside the Chicago area, and the manager’s lodging and travel costs would be deductible business travel. All three conditions are met, so reimbursements under an accountable plan can be excludable. Now suppose the employer also pays for the manager’s family to fly to Denver for a vacation. That payment is personal and must be included in wages.

Change one fact: the employer expects the Denver office to become the manager’s permanent post. The assignment is no longer realistically expected to last a year or less, so living expenses reimbursed for the Denver stay become wages. Enter 24 and 24 in the checker to see that outcome.

Limits of this page

This page covers the exclusion from wages described in Publication 15-A. It does not cover the employee’s own deduction rules in detail, the taxation of moving expenses generally, state rules, or foreign assignments beyond the publication’s statement that the rules generally apply inside and outside the United States. For payroll arithmetic on amounts that are wages, see our FICA tax calculator.

Sources

• IRS Publication 15-A, Employer’s Supplemental Tax Guide (2026): section 5, Wages and Other Compensation: Relocating for Temporary Work Assignments. Read November 2, 2026.

Edition read: Publication 15-A (2026), for use in 2026. Rates, wage bases and dollar limits on this page are the 2026 figures printed in that edition; check the current publication and the IRS employment tax pages for your tax year. This page summarizes the publication and does not replace it.