One Big Beautiful Bill Act (OBBBA): What It Means for Employee Relocation

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Key Takeaways: How OBBBA Impacts Employee Relocation

1. Moving Expense Deduction Slightly Expanded: The IRS moving expense deduction remains suspended for most, but now includes certain U.S. intelligence employees alongside active-duty military. Mobility teams should continue using existing policy workarounds.
2. Global Assignments Face New Tax Complexity: International tax reforms aim to localize operations and reduce profit shifting. Global mobility teams must brace for heightened compliance, shadow payroll adjustments, and a revised remittance excise tax.
3. Housing Becomes (Slightly) More Tax-Friendly: Mortgage interest and SALT deduction limits are raised, which may help transferees in high-cost markets. Mobility teams should prepare to counsel employees on buying vs. renting implications.
4. Border Security Enhancements May Cause Delays: New immigration-related funding and stricter documentation checks at the U.S.-Mexico border may slow cross-border relocations and increase visa processing times and costs.
5. Energy Policy Shifts May Spur Regional Relocations: Fossil fuel investment incentives could boost relocation demand in energy hubs like Texas and Alaska. Programs must stay agile to address cost-of-living and housing availability.
6. Workforce and Healthcare Reforms Influence Talent Mobility: Student loan changes, healthcare eligibility adjustments, and expanded family tax credits may impact employees’ relocation readiness and needs.
7. New Employer Tax Incentives Encourage Site Expansion: Business credits and opportunity zone renewals may lead to new facility openings—potentially increasing permanent and group relocations.
8. Strategic Alignment is Critical: Mobility leaders should review policies, align with tax/finance teams, and proactively communicate with employees. State-by-state variations could create inconsistent experiences.

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Employee relocation has always been influenced by economic, tax, and regulatory policies. However, few laws have incorporated as many significant changes in one package as the newly enacted One Big Beautiful Bill Act (OBBBA). While much of the focus has been on the bill’s tax cuts, energy priorities, and healthcare reforms, it will also generate ripple effects throughout the corporate relocation sector, both domestically and internationally.

At TRC Global Mobility, we help organizations anticipate and adapt to change, enabling you to move your talent seamlessly, compliantly, and cost-effectively. In this post, we will walk you through the most relevant provisions of the bill, highlight possible impacts on relocation programs, and share recommendations to help your organization stay prepared.

1. Tax Policy Changes: The Moving Expense Deduction is Slightly Expanded

OBBBA did not reinstate the IRS moving expense deduction for most relocating employees (Sec. 70113). OBBBA effectively extends a provision in the 2017 Tax Cuts and Jobs Act, which suspended this deduction for most taxpayers (except active-duty military).

What changed?

• Under OBBBA, the deduction for qualified moving expenses continues to be unavailable for most relocating employees.
• The moving expense deduction remains available for active-duty military personnel. The deduction was also extended to employees of certain branches of the U.S. intelligence community.

What this means for relocation programs:

• The relocation industry has lobbied since the passage of the 2017 Tax Cuts and Jobs Act to restore the moving expense deduction for all relocating employees. It succeeded in gaining a slight expansion of the eligible population of employees. Lobbying for broader relief will continue, with a particular focus on additional government employees.

Tip for mobility professionals:
Workarounds created after the passage of the 2017 Tax Cuts and Jobs Act, such as increased gross-up payments and the use of programs like amended value homesale programs, will continue to be operational. Interestingly, while TCJA changed the taxability of relocation benefits for the employee, the employer can still deduct these benefits from their corporate taxes. This reduces the tax impact for the employer despite increased gross-up payments.

2. International Tax Reforms: Potential Impacts on Global Assignments

The bill also contains several “America-First” international tax reforms (Title VII, Subchapter B). These provisions are designed to:

• Incentivize U.S. production and investment.
• Enhance American competitiveness: The Foreign-Derived Intangible Income (FDII) (now Foreign-Derived Deduction Eligible Income or FDEII) deduction is expanded, which is intended to encourage companies to locate their intangible assets and associated income-generating activities in the US.
• Discourage companies from shifting profits overseas: The reforms include modifications to the Base Erosion and Anti-Abuse Tax (BEAT) and Global Intangible Low-Taxed Income (GILTI) rules to make it less attractive for companies to move profits to low-tax foreign jurisdictions.

OBBBA also included some assignee-friendly modifications to the Remittance Excise Tax. This new excise tax affects electronic funds transfers to individuals outside of the U.S. The final legislation lowered the tax rate from 3.5% to 1% and exempted transfers from U.S. bank accounts or U.S. credit/debit cards.

Potential relocation impacts:

• Incentive to localize operations and roles: Some firms might reconsider at least some of their long-term expatriate assignments.
• Complex compliance and shadow payroll requirements: New sourcing and attribution rules will require additional scrutiny by global mobility and tax teams.

Tip for global mobility teams:
Coordinate closely with your corporate tax department and external tax advisors to ensure you understand how these changes could affect your program and international assignees.

3. Housing and Mortgage Implications: More Generous Limits to Deductions

A critical factor influencing employee relocation, particularly in decisions regarding home sale and purchase, is the treatment of mortgage interest and property taxes. OBBBRA brings significant changes:

• Extension of increased limits on qualified residence interest deductions (Sec. 70108), which maintains higher mortgage balance thresholds for deductibility. The legislation permanently extends the $750,000 cap on acquisition indebtedness ($375,000 for married individuals filing separately), maintains the deduction for interest on home equity loans, and classifies certain mortgage insurance premiums as qualified residence interest.

• Increased SALT (State & Local Tax) Deduction Cap: The SALT deduction cap has been raised from $10,000 to $40,000 starting in 2025 and continuing through 2029, allowing taxpayers who itemize to deduct more state and local taxes (including property, income, and sales taxes) from their Federal taxable income. This change replaces the $10,000 limit imposed by the 2017 Tax Cuts and Jobs Act, which was scheduled to expire at the end of 2025. (Before the Tax Cuts & Jobs Act, the SALT deduction was unlimited.)

Relocation consequences:

• Home affordability considerations: Higher deductibility thresholds could soften some of the tax burden and improve affordability calculations for transferees relocating to or within expensive housing markets.
• More favorable treatment of homeownership for relocating employees: The combined effect of high limits on mortgage interest and SALT deductions could tilt decisions toward buying over renting (though high home prices and limited inventory in many markets might cancel out some of this effect).

Tip for mobility teams:
Expect employee questions on the financial implications of potential relocations and home purchases. Be prepared to counsel them on the tax consequences of their housing choices in the destination location, or to direct them to expert resources.

4. Immigration and Border Security Measures

While the bill does not fundamentally restructure employment-based immigration policy, it allocates substantial new funding to enhance border security infrastructure and enforcement activities (Title IX). This includes investments in physical barriers, advanced surveillance systems, additional border patrol agents, and expanded inspection capacity at ports of entry along the U.S.-Mexico border.

For companies that relocate employees using cross-border commuter arrangements (e.g., employees living in Mexico but working in the United States) or those with frequent temporary assignments near the southern border, these changes could have a noticeable operational impact:

• Entry Processing Times: Enhanced screening protocols and more thorough vetting procedures are likely to lengthen wait times for employees crossing the border. Even travelers with valid work visas or commuter permits may face more frequent secondary inspections, which can create delays in commuting schedules and project timelines.
• Documentation Checks: Border officials are expected to increase the frequency and rigor of document verification. Employees should be prepared to present valid, original documents—such as visas, I-94 records, and employer support letters—and expect potential questions about the purpose of their travel.
• Import/Export Logistics of Household Goods Shipments: Companies coordinating household goods moves across the border could encounter more inspections of shipments, potentially delaying deliveries and increasing costs if shipments are held for inspection or required to meet new customs protocols.

In addition to operational impacts at the border, Title X, Subtitle A of the legislation introduces new or increased immigration-related fees. These fees may apply to petitions and applications relevant to common relocation scenarios, including:

• H-1B and L-1 visa petitions.
• Employment authorization applications.
• Permanent residence filings.

Over time, these additional costs can incrementally increase the total spend on inbound U.S. assignments and create budgeting uncertainty, particularly for high-volume relocation programs.

Tip:
Maintain close coordination with your immigration counsel and destination services providers to:

• Track and plan for any new fee schedules and procedural requirements.
• Prepare employees in advance for longer processing times and questioning at ports of entry.
• Ensure that all documentation is complete, current, and accessible when employees travel.
• Adjust assignment timelines and relocation budgets to account for the increased scrutiny and potential cost escalations.

Clear communication with relocating employees about what to expect at the border will help reduce anxiety, avoid delays, and maintain compliance with new enforcement practices.

5. Energy and Environmental Shifts: Indirect Effects on Destinations

OBBBA phases out or restricts numerous clean energy tax credits (e.g., the residential clean energy credit and clean vehicle credits), while expanding incentives for domestic fossil fuel production. Over time, this could reshape regional economies and housing markets in energy-producing states such as Texas, North Dakota, and Alaska.

Potential impacts:

• More relocation activity tied to oil and gas investments: Companies in extraction, refining, and logistics may accelerate hiring and relocations to those regions.
• Infrastructure upgrades in energy hubs: New construction may spur demand for temporary housing and relocation support.
• Possible divergence in state-level sustainability regulations: Employers may face complexity when supporting moves between states with different environmental priorities.

Tip:
Stay attuned to economic trends in destination markets. Relocation programs should remain flexible to accommodate fluctuations in housing availability, cost of living, and infrastructure readiness.

6. Workforce and Healthcare Provisions

Several provisions in the bill could influence talent availability and relocation readiness:

• Student loan reforms (Title VIII): Reduced loan caps may affect the financial flexibility of early-career talent, potentially affecting their employment and relocation decisions.
• Medicaid and Medicare eligibility tightening (Subtitle B, Health): Some relocating employees or their dependents could face shifts in healthcare access when moving between states.
• Tax incentives for adoption, dependent care, and childcare (Sec. 70401–70405): Expanded credits may offset some of the costs associated with family relocation.

Tip:
Update your relocation program FAQs and pre-decision counseling materials to address employees’ questions about healthcare and dependent care resources in their new locations or to direct them to appropriate resources.

7. Employer Tax Credits and Incentives

To encourage domestic production and investment, the bill reinstates and expands several business tax incentives, including:

• Full expensing of domestic research and experimental expenditures.
• Enhanced paid family and medical leave credit.
• Advanced manufacturing investment credits.

For employers with operations in designated opportunity zones, the permanent renewal of opportunity zone incentives (Sec. 70421) can support investment in facilities that may create the need to relocate current employees.

Tip:
As your company makes decisions around site selection, cost modeling, and incentive negotiations with local jurisdictions, ensure that mobility planning is part of the discussion. New facilities might require permanent moves, group moves, or short-term domestic assignments for current managers.

8. Recommendations for Mobility Leaders

Given the bill’s wide-ranging provisions, now is the time to:

• Review your relocation policies and cost models. Factor in mortgage interest and SALT changes, as well as regional tax shifts.
• Align with your tax and finance teams. New international tax rules can create hidden liabilities if compensation and payroll structures are not updated.
• Communicate with relocating employees. Proactively share information about tax benefits, housing considerations, and compliance expectations.
• Monitor state responses. Some states may decouple from Federal provisions or enact offsetting tax measures, creating variability across locations.

Conclusion

OBBBA is ambitious in scope and will inevitably create winners and losers across industries and geographies. For mobility professionals, it highlights the importance of vigilant planning and clear communication. Regardless of the scope of your program, TRC Global Mobility is here to help you achieve your mobility objectives in this new environment.

If you have questions about how these changes might impact your relocation program, contact us. Together, we can ensure that your relocating employees and your organization continue to move forward with confidence.

This post is provided for general informational purposes and does not constitute tax or legal advice. Organizations should consult their advisors for guidance tailored to their specific circumstances.