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What is a relocation package? A comprehensive guide for job seekers

What is a relocation package? A comprehensive guide for job seekers

Artwork by: Aleksandra Remaruk

Getting a new job is exciting, but it comes with an added layer of stress if you have to move to a new location. Fortunately, many employers provide a relocation package to help with some of the costs of a move. So what is a relocation package, exactly? We'll give you the details so you can make the right move.

So you've been offered an exciting new job. Great! But there's one catch: it's located halfway across the country, and you'll have to move! While packing up your entire life and settling in a completely new location can be stressful, many companies offer a perk called a “relocation package” to help mitigate the costs involved with moving. The scope of a relocation package will vary based on the company, the position, and the employee's circumstances, but it's often open for a bit of negotiation. Fortunately, we've got the run-down on what a relocation package is and what you can expect when considering relocating for your work. 

In this article, we’ll discuss:

  • What is a job relocation package?

  • What is typically included in a relocation package?

  • Do you have to pay back a relocation package?

  • How do you negotiate a relocation package?

  • Frequently asked questions

What is a job relocation package?

Given today’s marketplace, employers know that their ideal candidate for a position may not be a local hire. Expanding their applicant pool, and providing incentives to make the move, can provide companies the talent they need to stay competitive. That’s why many of them are willing to provide a financial benefit called a relocation package to help allay the significant cost—and effort—involved in making the move to a new city. 

While rates of relocation took a hit during the COVID-19 pandemic, according to a survey by Challenger of 3,000 employees, the percentage of workers relocating was 2.4 percent in the first quarter of 2024, with employees making more than $200k per year at 3.7 percent. However, offering a relocation package isn’t a “slam dunk” for hiring new employees, as the increase in remote work has many workers wanting to stay where they are.

Keep in mind that a job relocation package is more than paying for the move. Depending on the package, it might include a wide variety of benefits to make the moving process easier. While employers are under no legal obligation to pay for relocation, a relocation package can help with employee satisfaction, production, and retainment, so it's often helpful for the company to offer one. 

What is typically included in a relocation package?

While different companies will offer different relocation packages, generally based on the location and position of the employee, several items are typically included in a reasonable relocation package, which can cost the employer anywhere from $19,309 to $97,166, depending on whether it’s for a new or a current employee, and if the employee owns a home or rents. The package can also vary depending on how far the employee is moving, their employment status, and if they own a home. 

There are different types of packages, including full service, partial reimbursement, and a lump-sum package, which allows the employee to use the money as they choose to cover their expenses. 

Assistance in selling your current home

Sometimes, your company will assist with selling your current home, although you may have to negotiate for this benefit. In some cases, the company may be willing to buy your house or utilize a third party for the sale. The costs the package may cover include realtor fees, closing costs, and any advertising the real estate agent may perform. Companies may also assist in finding appropriate permanent housing for the employee.

Moving costs

Relocation packages often cover the costs incurred with the actual move, such as packing of household items, transport, and mover's insurance. Costs may be reimbursed after the move, or employees may be given a lump payment upfront.

Temporary housing

If there’s a hard-start date, a company may offer temporary housing, depending on how soon the move is needed. This housing might include an apartment, a residential hotel, or an Airbnb. Some companies may also cover the utilities of the temporary residence. 

Travel expenses

A typical relocation package may cover the typical costs associated with moving, such as rental cars, car moving services (especially if you’re moving overseas), flights, or even pet transportation.

Relocation bonuses

Typically a one-time payment, a relocation bonus can be offered to motivate the employee to make the move, and is separate from their regular salary.

Visits to the new location

Some companies will cover costs for the employee to visit the new location, either to look for new housing, and schools or to just "get a feel" for the place. The employee may be allowed to make one visit or several, depending on the parameters of the package.

Do you have to pay back a relocation package?

If you break the terms of your compensation agreement, yes, you may be required to reimburse the company for the expenses incurred during your move. For example, if you leave your job before the contract expires, generally one or two years, and you’re in breach of contract, you may have to pay the company back. However, if you’re laid off, you probably won’t have to pay them back, because you’re not leaving voluntarily. No matter the case, however, it’s very important to read your contract carefully to make sure you know what you’re liable for.

How do you negotiate a relocation package?

Knowing how much to ask for in a relocation package is important, and can make the difference in accepting the new job or not. No relocation package should be a "one size fits all" situation, as each employee (and position) is different. To negotiate the best package for you, consider the following elements.

Assess your overall relocation needs

There's a big difference between moving to a neighboring state and a location that is across the county (or globe!). Can you drive to the new location, or do you need to fly? Do you know anyone in the new city who can help you get settled, or are you on your own? What's the housing situation like in the new location? Will your family be incurring any major expenses, such as schooling, or does your spouse need to find a new job? 

All of these need to be taken into consideration when negotiating for a viable relocation package. For example, if the new job is within a reasonable driving distance, you may ask for a more generous fuel allowance. If there's a tough housing market in the new location, ask for temporary housing arrangements to be included.

Take a close look at the initial offer

Once you’ve received your relocation package, look it over carefully, especially the fine print. Make sure you understand what will be covered in the package, and any restrictions placed on it. Compare that package with your identified relocation needs, and note any area in which it falls short as well as anything that you don't need that you can give up in favor of something else. Having all the information in front of you and knowing how the package aligns with your needs will help you support your case if you need to make a counter offer.

Do your research

Even if it seems you’ve been offered a great relocation package, take some time to find out what other companies, especially direct competitors, are offering for employees in similar situations. Perhaps other businesses offer child care expense reimbursement, and that’s an area where your package falls short. Or, maybe a competitor offers a relocation bonus to employees at the same level as you, and this is something that would be helpful to you. 

You can start your research on other company’s websites and job postings, as they sometimes offer this information. If not, speak to friends and family and ask what kinds of relocation benefits are offered by their employers, and use that as a comparison.

Speak to your employer

Once you have your “ducks in a row,” bring your concerns to your employer and ask if there is any room for them to cover additional expenses, or if they’re willing to forgo some of the offered expenses in exchange for ones you need. For example, if you live in a small apartment and don’t have a lot of personal belongings, maybe you can exchange packing services for travel reimbursement. Or, if you have a family, you could request that the company cover the costs of childcare while you’re making the move. No matter what you’re negotiating, however, make sure your “ask” is reasonable. Your employer most likely has a budget they need to adhere to, and there may not be more money to offer.

Expert Tip

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Frequently asked questions

Do you get taxed on a relocation package?

Yes. In the U.S., since the passage of the Tax Cuts and Jobs Act in 2017, employees are required to pay taxes on their relocation package, and employers will include it on their W9, so employees will have to pay taxes on it, in addition to their base income, as it's included in their "taxable income." There are two exceptions, however. Employees can deduct the moving expenses if they're active duty service personnel, or they incurred expenses for a move that took place before January 1, 2018, which were deductible before that date. Regardless, it's always a good idea to consult with a tax professional.

How do you receive relocation package funds?

That depends on the company and the package offered. Some packages include a lump sum you can spend at will or you may be given a list of requirements for the funds and a request for proof that the money was used properly. Others may ask you to bill them for any costs incurred from the move or cover the moving costs directly. Some companies will add a portion of the reimbursement to your paycheck, or provide reimbursement after the move, but only for approved relocation expenses. Make sure you understand the relocation package parameters before you accept the transfer or new position to eliminate any misunderstandings.

How do you determine a reasonable relocation package?

A good relocation package should benefit both the employee and the employer. It should provide enough incentive so that the employee wants to make the move, thereby retaining valuable talent, and reflecting the employee's current position within the company (i.e. executives will most likely be offered a more generous package.) It should also address the employee’s basic needs, such as handling visa services if the employee is moving overseas. A reasonable relocation package should also address an employee's housing needs, moving, and cost-of-living expenses, so that the employee isn't lowering their standard of living to relocate for work. 

If you’re looking to take your career to the next level, consider enlisting the help of one of Career.io’s Career Coaches. With 50-minute sessions, available 7 days a week, our coaches have a proven track record of helping individuals achieve their career goals.

Key takeaways

  1. A job relocation package is offered by an organization to help employees move from one location to another as part of their employment agreement.

  2. You can negotiate your new job relocation package as long as you know what you need and you're reasonable with your suggestions.

  3. Most relocation packages cover moving expenses, travel, and temporary housing, although some may also provide visits to the new location, assistance with selling your home, or fuel reimbursement.

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