Employee Relocation Allowance

💰 Relocation Costs [Calculator and Budget for Employees]

Relocating an employee involves a wide range of costs—some expected, others hidden. While expenses such as real estate commissions and travel allowances are straightforward, many indirect costs can quickly add up if not planned for in advance.

Understanding the full scope of relocation expenses can help your company design a smarter, more accurate relocation budget. This guide outlines key cost categories and strategies, with a relocation cost calculator to assist with estimating totals.

🧮 Relocation Cost Calculation

Although the cost of relocating (add link: relocation-cost-calculator) an employee can vary greatly based on location, family size, and job level, the categories below provide a practical starting point for planning.

🏷️ Main Employee Relocation Costs

🏠 Real Estate Expenses

Selling the current home or breaking a lease

Buying a new property or securing a rental

🧭 House-Hunting Trips

Travel and lodging during the search for a new home

Optional personal time for orientation/sightseeing

📦 Moving Costs

Hiring professional movers

Packing materials and labor

Transportation of household goods

✈️ Travel

Flights, car rentals, or mileage for the employee and family

🏨 Temporary Housing

Hotel stays or short-term rentals if the new home isn’t move-in ready

📄 Relevant Documentation

Work permits and visas (for international relocations)

➕ Additional Costs to Consider

📦 Temporary Storage

If temporary housing lacks sufficient space, storage may be needed

🤝 Spouse Support

Job assistance or business startup support for the employee's partner

👶 Children and Dependents

Financial support for:

School search

Daycare

Enrollment fees

🌐 Cultural Support

Language classes

Cross-cultural training for international assignments

🛡️ Insurance

Valuation coverage from moving companies for damaged or lost items

🔄 Miscellaneous Costs

Driver’s license transfers

Pet registration

Utility setup

Cleaning services

💼 Tax Considerations

Due to recent tax law changes:

🧾 Relocation costs are no longer deductible for employers

📈 Employees must pay tax on relocation (add link: relocation-tax) benefits

💡 Mitigation Strategy: Gross-Up Example

Without Gross-Up:

Tim receives a lump sum (add link: lump-sum-relocation) of $5,000

After 32% tax, he nets $3,400

With Gross-Up:

Employer increases payment to $7,352

Tim receives the full $5,000 after taxes
✅ While the company pays more upfront, the employee avoids financial burden

📦 Summary of Relocation Packages

Each employee’s situation is unique, so relocation packages are tailored. Common types include:

💰 Lump Sum Package

A fixed payment given directly to the employee

Offers simplicity but limited oversight

📊 Tiered Package

Benefits scale based on:

Job level

Family size

Housing needs

Offers cost control and fairness

📁 Managed Budget Package

Similar to lump sum, but expenses are categorized (e.g., housing, travel)

Unused funds are returned to the employer

🛡️ Fully Covered Relocation Package

Best for executives

All costs managed and paid by the employer or relocation specialist (add link: relocation-specialist)

Delivers full flexibility and minimal stress

🧩 These are the types of packages CARS Relocation helps employers design for cost control and employee satisfaction.

📋 Planning Your Relocation Budget

No matter which package you use, proper planning is crucial.

✅ Track Expenditures

Assign budgets per category

Monitor actual costs closely

🔄 Adjust Accordingly

Leave room for budget flexibility, especially in small companies

🤝 Communicate and Customize

Stay in contact with the relocating employee

Tailor support to their specific needs

💡 Reducing the Cost of Relocating

Here’s how to manage costs without sacrificing quality:

📘 Set Clear Policies

A documented policy avoids confusion

Define limits (e.g., on home sale loss reimbursement)

🧑‍💼 Partner with a Relocation Management Company

Instead of investing in expensive tech, trust experts like CARS Relocation

We offer:

Vendor management

Cost tracking

Strategic support tailored to your team

📞 Ready to Simplify Employee Relocation?

CARS offers expert guidance, cost management, and employee-focused support.
Whether you're relocating one person or rolling out a company-wide program, we’re here to help.

👉 To learn more about the cost of relocation and how CARS can assist you, read our guide on employee relocation.

Let us help you save time, reduce costs, and ensure a smooth transition for your team.