Tax Reform

A key issue emerged in December 2017: passage of the U.S. Tax Cuts and Jobs Act. The new law eliminates the moving-expenses deduction for the next eight years. The survey incorporated additional questions to assess the potential impact of this legislation.

We queried the law’s impacts—for both 2018 and 2019-2025—regarding five key aspects of relocation: costs, policy, administration complexity, recruiting difficulty, and volumes. While there is some uncertainty, the vast majority of respondents across company size provided estimates on expected impacts.

Costs

Roughly nine out of ten organizations believe relocation costs will be affected. Around half expect the legislation to increase relocation costs both in 2018 and over the next seven years. Far more mid-size and large firms (53% and 68%) feel this way for 2018 compared to small firms (31%), but half or more firms across company size expect increased costs over 2019-2025. Around a tenth or less across size expect costs to decrease both immediately and over the course of the law’s timeframe.

Policy Changes

Roughly four out of ten firms, both for 2018 and over the next seven years, expect the legislation to drive an increase in changes to relocation policy. Again, over the course of 2018, more mid-size and large firms than small firms feel this will be the case (42% and 52% vs. 28%). However, expectations for 2019-2025 are similar; less than 10% across firm size expect the need for policy changes to lessen, either immediately or over the full timeframe of the bill.

Administration Complexity

Nearly nine out of ten organizations believe the law will affect the complexity of relocation administration in 2018 and around eight out of ten project changes for 2019-2025. Around four out of ten firms expect administrative complexity to increase and an equal percentage predict it will remain about the same, both in 2018 and beyond. Expectations of increased complexity or stability are similar across firm size, both for 2018 and 2019-2025. Only around a tenth of firms expect the legislation to lessen administrative complexity.

Recruiting Difficulty

Overall, around half of organizations expect the law to make recruitment neither more nor less difficult in 2018. However, more than a fourth across company size expect added difficulty, both in 2018 and beyond. Across organization size, few expect the law will decrease the difficulty of recruiting employees through 2025.

Volume

As for the law’s projected impact on relocation volumes, the picture is immensely mixed. Overall, roughly nine out of ten firms predict some level of impact on their number of relocations in 2018; nearly equal percentages expect increased (22%) or decreased (19%) relocations and around half expect levels to remain the same. Interestingly, more large companies project a decrease than an increase (24% vs. 14%), while more midsize firms expect an increase rather than a decrease (34% vs. 15%).

Looking toward 2019-2025, expectations shift. Around a third of firms across sizes project increased relocation volumes, compared to roughly one out of ten projecting a decreasing effect. More than a third predict stability in volumes as a byproduct of the law’s changes, or that the legislation’s removal of the tax credit won’t have a measurable effect on volumes either way.

Policy Changes Planned for 2018

The majority of organizations, regardless of size, have plans to implement policy changes in response to the tax law. Understandably, mid-size and large firms are more likely to have plans in place than are small firms (78% and 87% vs. 58%).

• Among organizations reacting with policy changes in 2018, the most popular tweak across organization size is to gross-up taxable relocation benefits. Large firms are the most likely to make this policy change.
• Around a third of firms across all sizes plan to expand the use of lump-sums.
• Roughly a third or more of mid-size and large firms plan to streamline relocation processes to reduce costs and/or to restructure relocation policy, compared to around a fourth of small firms.
• Small firms are more likely than mid-size and large firms to plan to withhold taxes on relocation benefits.

Question 17-1

Projected Impact of U.S. Tax Cuts and Jobs Act in 2018 – Number of Relocations Performed

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Question 17-2

Projected Impact of U.S. Tax Cuts and Jobs Act in 2018 – Complexity of Relocation Administration

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Question 17-3

Projected Impact of U.S. Tax Cuts and Jobs Act in 2018 – Relocation Costs

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Question 17-4

Projected Impact of U.S. Tax Cuts and Jobs Act in 2018 – Relocation Policy Changes

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Question 17-5

Projected Impact of U.S. Tax Cuts and Jobs Act in 2018 – Difficulty Recruiting Employees to Relocate

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Question 17-6

Projected Impact of U.S. Tax Cuts and Jobs Act from 2019-2025 – Number of Relocations Performed

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Question 17-7

Projected Impact of U.S. Tax Cuts and Jobs Act from 2019-2025 – Complexity of Relocation Administration

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Question 17-8

Projected Impact of U.S. Tax Cuts and Jobs Act from 2019-2025 –Relocation Costs

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Question 17-9

Projected Impact of U.S. Tax Cuts and Jobs Act from 2019-2025 –Relocation Policy Changes

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Question 17-10

Projected Impact of U.S. Tax Cuts and Jobs Act from 2019-2025 –Difficulty Recruiting Employees to Relocate

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Question 18a

Companies Anticipating Making Changes to Relocation Policy in 2018 in Response to the U.S. Tax Cuts and Jobs Act*

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Question 18b-1

Changes to Relocation Policy Anticipated in 2018 in Response to Tax Reform*

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Question 18b-2

Changes to Relocation Policy Anticipated in 2018 in Response to Tax Reform*

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