Work out relocation package value instantly with clear inputs, formula shown and shareable results.
A relocation package has two very different figures: what it costs the employer and what you actually receive. Where benefits are taxable, a gross-up is needed so that the net amount in your hands equals the intended benefit — and grossing up correctly means dividing by (1 - tax rate), not multiplying.
Taxable benefit
Taxable = Moving cost + Temporary housing cost
Gross-up
Gross-up = Taxable x Tax rate / (1 - Tax rate)
Because the gross-up is itself taxable. Multiplying by the rate leaves you short; dividing by one minus the rate makes you whole.
A lump sum is simpler and you keep any savings, but it is usually fully taxable and rarely covers an unexpectedly expensive move.