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Moving (Relocation) - Temporary Housing
Reimbursements to employees for temporary housing/living expenses related to a move are considered taxable income.
Taxes are withheld at the supplemental tax rate of 25 percent for federal and 4.63 percent for state. Housing/living expense reimbursements are subject to Medicare tax and OASDI (if applicable), but are not subject to mandatory or supplemental retirement deductions.
Note: Reimbursement for housing expenses related to relocation should not be confused with Housing Allowance, which is an ongoing payment unrelated to a move.