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Civilian Permanent Change of Station (PCS) Tax Information

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• Taxable Entitlements
• Relocation Income Tax Allowance (RITA)

Taxable Entitlements

When you perform a Civilian Permanent Change of Station (PCS) with the government, the Internal Revenue Service (IRS) considers the majority of your entitlements to be taxable. 

Taxable Reimbursements Include:

• En route travel, lodging, meals and transportation including individually billed account/personally procured airfare, government-issued airline tickets-commercially billed account, privately owned vehicle mileage, tolls, taxis, etc.
• All House Hunting Trip (HHT) expenses, including Government Procured Airfare and per diem
• All Temporary Quarters Subsistence Expenses (TQSE) including lodging and meals
• All real estate expenses
• Household Goods Shipment (HHG)
• Temporary HHG Storage
• Non-temporary household goods storage (CONUS only) 
• Miscellaneous Expense Allowance (MEA)
• Relocation services (i.e., Home Marketing Incentive Payments, Property Management, etc.)
• Withholding Tax Allowance
• Relocation Income Tax Allowance (RITA)
• Privately Owned Vehicle (POV) Shipment (CONUS only)
• Mobile Home Transportation 

Non-Taxable:

The Relocation Services Company (RSC) home sale program remains non-taxable. Under this program, residences of transferees are purchased under a RSC supplier contract and then sold in a separate independent transaction. The cost of those residential sales will continue to be governed by IRS Revenue Rule 2005-74 and are not taxable income to employees.

Additionally, expenses for extended (non-temporary) HHG storage for employees assigned to OCONUS locations are tax exempt. Allowances for POV shipment to, from, and between OCONUS posts of duty are also exempt from taxation.

Applicable Taxes:

A mandatory 22 percent Federal Income Tax Withholding (FITW), applicable 6.2 percent Federal Insurance Contributions Act (FICA) Tax and 1.45 percent Medicare Tax is withheld from all taxable entitlements and deposited with the Internal Revenue Service (IRS). State and Local taxes are not withheld; consult with your local tax advisor to determine if your PCS wages are taxable under your state and local governments current regulations.

Relocation Income Tax Allowance (RITA)

RITA reimburses recently relocated employees MOST of the additional Federal, State, and local income taxes incurred because of receiving taxable travel income.  The Travel W-2 wages/income and withholdings are reported to the IRS.  Travel W-2s must be included in your taxable income on your IRS Form 1040 to be eligible for RITA.  RITA applies to taxable reimbursements received in the previous year. 

If you select the Withholding Tax Allowance, then you must file a RITA claim within 120 days of the following calendar year. Failure to file a timely RITA claim will result in a debt owed to DFAS.

The amount of income reported on the Certification Form must match the income tax documentation submitted with the RITA claim. A state must be claimed on the Certification Form with state taxes included for state tax consideration.

RITA cannot be filed if you were only reimbursed RITA in the previous year. RITA calculation is based on taxable income from the Federal Income Tax Return (Form 1040) (after exemptions and deductions) and the IRS published tax tables.

Page Updated: June 18, 2025