Positive News On PCS Tax Relief For Departing, Incoming Feds

posted August 13, 2019

Reimbursement of taxes on PCS moves for retiring/separating feds and new/incoming employees is one step closer to becoming reality.

Both the Senate and House Armed Services Committees included language in their respective versions of the 2020 National Defense Authorization Act (NDAA) to extend Relocation Income Tax Allowance (RITA) and Withholding Tax Allowance (WTA) reimbursements to new federal employees and retiring/separating feds who are taxed for PCS moves and assistance between their home of record and their first or final duty station.

For the tax relief to be enacted, both chambers would have to agree in conference to keeping the RITA/WTA relief in the final version of the NDAA, which would then have to be approved by the House and Senate and signed into law by the White House.

The fact the RITA/WTA language in both the Senate and House versions are virtually identical make final passage likely, though nothing is guaranteed until the entire process plays out.

RITA and WTA provide reimbursement for "substantially all" federal, state and local taxes paid by qualified federal employees on things like moving services, temporary quarters allowance and other assistance provided in conjunction with a PCS move.

Such moving assistance to civilian federal employees became taxable under the 2017 Tax Cuts and Jobs Act. RITA and WTA had already been extended in 2018 to current federal employees who relocate from one duty station to another in the service of the federal government.

RITA and WTA currently are not provided for new employees being moved to their first overseas duty location or to retiring/separating feds being moved back to their home of record after leaving federal service, thus the need for the extension in the 2020 NDAA.

NEA Government Relations has worked with other federal employee groups to promote inclusion of the RITA/WTA extension in the 2020 NDAA.

Unfortunately, the NDAA language does not extend RITA/WTA retroactively to incoming/separating/retiring feds who were taxed in the 2018 tax year. The extension would begin with the 2019 tax year. Nor does the NDAA permanently eliminate the tax on civilians' PCS moves.

Congress is currently in recess until after Labor Day. The conference process to come up with the final NDAA language will begin sometime after that. FEA will keep members informed as the NDAA moves towards final passage. DoDEA posted information on applying for RITA reimbursement at this page