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GENERAL SERVICES ADMINISTRATION

Washington, DC 20405

December 4, 2019

Federal Travel Regulation

GSA Bulletin FTR 20-02

TO: Heads of Federal Agencies

SUBJECT: Relocation Allowances – Taxes on Travel, Transportation, and Relocation

Expenses

1. What is the purpose of this bulletin? This bulletin contains certain examples and

tables that were removed from FTR Part 302-17 as a result of FTR Amendment 2020-

02 (the Amendment). The Amendment directs agencies to a GSA bulletin for the

updated examples. Accordingly, this bulletin contains those updated examples and

tables reflecting changes to relocation allowances as mentioned in the Amendment.

This bulletin also rescinds FTR Bulletins 18-05 and 19-02. The information in the

aforementioned bulletins is duplicative now that the U.S. General Services

Administration (GSA) has published the Amendment, dated November 25, 2019, as a

direct final rule amending the Federal Travel Regulation (FTR) in line with changes to

the Internal Revenue Code made by Public Law 115-97, known as the “Tax Cuts and

Jobs Act of 2017” (the Act).

2. What is the effective date of this bulletin? This bulletin is effective upon signature,

and will remain in effect until explicitly cancelled or superseded.

3. What is the background of this bulletin? The Act suspended moving expense

deductions along with the exclusion for employer reimbursements and payments of

moving expenses effective January 1, 2018, for tax years 2018 through 2025. GSA

issued FTR Bulletins 18-05, dated May 14, 2018, and 19-02, dated November 27, 2018,

providing information to agencies on the new tax changes affecting relocation

entitlements. Federal agencies were advised to continue to rely on the FTR bulletins

until GSA amended the FTR. In consultation with the Secretary of the Treasury and

other agencies, GSA issued the Amendment to ensure the FTR is congruent with the

Act’s resulting changes to the Internal Revenue Code.

4. To whom does this bulletin apply? This bulletin applies to employees identified in

FTR §302-1.1 who are authorized relocation reimbursements under the FTR and who

receive some or all reimbursements, direct payments, or indirect payments on or after

January 1, 2018, and on or before December 31, 2025.

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5. What relocation expenses reimbursements became taxable? Pursuant to the FTR §

302-17.8(b), the following table summarizes the FTR allowances, limitations, and tax

treatment of each reimbursement, allowance, direct payment(s), or indirect payment(s)

to a service provider or vendor.

Entitlement

Summary of FTR Allowance

FTR Part or Section

Tax

Treatments

Overseas Tour Renewal Agreement Travel

Roundtrip travel and transportation expenses between

overseas post of duty and the employee’s actual place of

residence in the U.S.

Part 302-3, Subpart C and F

Nontaxable

Meals for employee and/or family

members while en route to the new duty

station

Standard CONUS per diem rate for meals and incidental

expenses

§302-4.200

Taxable

Lodging for employee and/or family

members while en route to the new duty

station

Standard CONUS per diem rate for lodging expenses

§302-4.200

Taxable

Transportation using your POV to your

new duty station

Actual cost or the rate established by GSA for using a POV

for relocation

Part 302-4

Taxable

Transportation to your new duty station

using a common carrier (an airline, for

example)

Actual cost

Part 302-4

Taxable

Per diem and transportation for house

hunting trip

Per Diem Allowance: 10 days of per diem plus

transportation expenses - must be itemized; or

Lump Sum Method: locality rate times 5 (one person) or

times 6.25 (employee and spouse) for up to 10 days - no

itemization required

Part 302-5

Taxable

Temporary quarters subsistence expenses

(TQSE)

Actual Expense Method: Maximum of 120 days; full per

diem for only the first 30 days - itemization required; or

Lump Sum Method: multiply the number of days allowed by

.75 times the locality rate (30 days maximum) - no

itemization required

Note: Additional TQSE allowances for family members are

less than the benefit for the employee occupying TQ alone.

§302-6.100

§302-6.200

Taxable

Shipment of household goods (HHG) to

include unaccompanied air baggage (UAB)

and professional books, papers, and

equipment (PBP&E)

Transportation of up to 18,000 pounds

Part 302-7

Taxable

Temporary storage of HHG in transit

Temporary storage of HHG NTE 150 days for CONUS

relocation, and NTE 180 days for OCONUS relocation

§302-7.9

Taxable

Extended storage of HHG

CONUS – Temporary Change of Station per agency policy

or isolated duty station only

OCONUS - Agency policy

§302-3.414;

Part 302-8, Subpart B

Part 302-8, Subpart C and D

Taxable

Nontaxable

Transportation of privately-owned vehicle

(POV)

CONUS - Agency discretion

OCONUS - Agency discretion

Part 302-9, Subpart D

Part 302-9, Subpart B and C

Taxable

Nontaxable

Shipment of mobile home in lieu of HHG

Limited to maximum allowance for HHG

§302-10.3

Taxable

Residence transactions

Sale of home

Purchase of home

Lease-breaking

Closing costs up to 10% of actual sales price

Closing costs up to 5% of actual purchase price

Itemization required.

§302-11.300(a)

§302-11.300(b)

§§302-11.430 and 302-

11.431

Taxable

Payments to Relocation Service

Contractors

According to agency policy and contracts

Part 302-12

Taxability

determined on

a case-by-

case basis

Home Marketing Incentive Payment

See internal agency policies and regulations

Part 302-14

Taxable, but

not eligible for

WTA or RITA

Property Management Services

See internal agency policies and regulations

Part 302-15

Taxable

Miscellaneous expenses

$650 or $1,300; or

Maximum of 1 or 2 weeks basic pay

§302-16.102

§302-16.103

Taxable

Withholding tax allowance

Reimbursement allowances to assist with additional tax

liability for relocation allowances, reimbursements, direct

payments or indirect payments to vendors

Part 302-17, Subpart B

Taxable

Relocation income tax allowance

Based on income and tax filing status

Part 302-17, Subpart C

Taxable

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6. Agencies are authorized to pay a Withholding Tax Allowance (WTA) and Relocation

Income Tax Allowance (RITA) to eligible employees. What are the relevant special

terms and examples for calculating WTA and RITA payments?

FTR, Chapter 302, Part 302-17 establishes the process for calculating WTA and RITA

payments. This FTR bulletin includes examples for the following relevant terms:

Marginal Tax Rate (MTR) pursuant to FTR § 302-17.1, Combined Marginal Tax Rate

(CMTR) pursuant to FTR § 302-17.40, Withholding Tax Allowance (WTA) pursuant to

FTR §302-17.24, and Relocation claims paid with or without the WTA, pursuant to §

302-17.61.

a. Marginal Tax Rate (MTR). The MTR is the rate applied to the last increment of

taxable income after taxable relocation benefits have been added to the employee’s

income. For example, suppose a married employee who files jointly has a taxable

income of $120,000. According to the IRS 2019 Tax Rate Schedules, taxable income

between $78,950 and $168,400 is taxed at the 22 percent tax rate. Therefore, since

their $120,000 of taxable income falls within that range, it is taxed at the 22 percent

MTR. If the employee receives $60,000 of taxable relocation benefits, then the taxable

income for the employee and spouse increases to $180,000, which is in the next

highest tax bracket. In this example, the employee and spouse now have a Federal

MTR (FMTR) of 24 percent after the taxable relocation benefits have been added to

their income.

b. Combined Marginal Tax Rate (CMTR). The CMTR is the rate determined by

combining the applicable FMTR, state MTR (SMTR) and local income taxes (LMTR)

using the procedures provided in FTR §302-17.40.

Formula: CMTR = FMTR + (1-FMTR)(SMTR) + (1-FMTR)(LMTR)

Given an FMTR of 22%, SMTR of 6%, and LMTR of 6%, the CMTR would be

calculated as follows:

CMTR = 0.22 + (1.00 – 0.22) (0.06) + (1.00-0.22) (0.03) = .2902 or 29.02%.

c. Withholding Tax Allowance (WTA). The agency computes the WTA by applying a

grossed-up withholding each time the employee incurs a covered, taxable relocation

expense, regardless of whether it is a reimbursement, allowance, or direct or indirect

payment to a vendor. The formula to calculate the WTA is as follows:

Formula: WTA = R/(1 - R) x Expense

where R is the withholding rate for supplemental wages

Given a supplemental wage rate of 22 percent, and the following authorized

expenses, agencies would “gross-up” the relocation entitlement(s) to offset the

additional federal tax liability, WTA would be calculated as follows:

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House hunting trip $3,000.00

Temporary Quarters Subsistence Allowance $5,000.00

Total relocation expenses $8,000.00

WTA = .22/(1 - .22) x $8,000.00 = $2,256.41

d. Relocation claims paid with or without the WTA. Agencies have the option of

offering WTA for relocation payments to those who are eligible for WTA and RITA. The

following example illustrates a calculation without WTA, and a calculation with WTA.

Note 1 to table: Agencies must deduct withholding for Federal supplemental wages

(currently based on the 22% FMTR), and Federal Insurance Contributions Act (FICA) -

Medicare (currently 1.45%) and Social Security (currently 6.20%). For WTA calculation

see Paragraph 6(c) of this bulletin. To calculate withholding for Federal supplemental

wages and FICA, multiply the Net allowance by the applicable percentage withholding.

Note 2 to table: Net amount due to employee equals Net allowance minus Federal

supplemental wage withholding and minus FICA total.

Example

Without WTA

With WTA

Relocation allowance (RA)

$1,300.00

WTA

N/A

$366.67

Net allowance (RA plus WTA)

$1,300.00

$1,666.67

Federal supplemental wage

withholding

-$286.00

-$366.67

FICA

Social security withholding

-$80.60

-$103.33

Medicare withholding

-$18.85

-$24.17

Net amount due to employee

$914.55

$1,172.50

8. Whom should I call for further information? For further information or clarification of

content, please contact Mr. Rick Miller, Office of Government-wide Policy (M), Office of

Asset and Transportation Management (MA), at (202) 501-3822 or by e-mail at

travelpolicy@gsa.gov. Please cite to FTR Bulletin 20-02.

By delegation of the Administrator of General Services,

Jessica Salmoiraghi

Associate Administrator

Office of Government-wide Policy

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