But it would also be considered highly provocative by Palestinians, who consider East Jerusalem the capital of a future state, and could trigger protests from America's Arab allies.
Every six months since then, four consecutive presidents - Democratic and Republican (including Trump himself) - have signed such waivers. Trump and his last three predecessors have each delayed an embassy move in part to facilitate peace talks with the Palestinians who oppose it.
US President Donald Trump is seemingly closer than ever to announcing that the American Embassy in Israel will move to Jerusalem, a statement that could stoke tensions in the region.
The officials weren't authorized to discuss the matter publicly and demanded anonymity. And, despite the 1995 Jerusalem Embassy Act stating the USA must move its embassy to Jerusalem, previous US presidents have signed a waiver that keeps the embassy in Tel Aviv rather than tackling the backlash that would come with a move.
US Ambassador to Israel, David Friedman said earlier this month that it his belief that President Trump would in fact move the embassy, calling tit a matter of "when, not if".
President Donald Trump is likely to waive a requirement that the United States move its embassy in Israel to Jerusalem, but is weighing other options to make clear his intent to do so eventually, a senior administration official said on Thursday.
Mr Trump pledged on the presidential campaign trail a year ago that he would move the embassy from Tel Aviv to Jerusalem.
The status of Jerusalem is one of the major stumbling blocks in achieving peace between Israel and the Palestinians.
However, if Mr Trump decides to declare Jerusalem as Israel's capital, even without ordering an embassy move, it would be certain to spark an worldwide uproar.
Jerusalem annexed the Arab-majority eastern parts of the city after the Six Day War in 1967, a move never recognized by the bulk of the worldwide community.
Palestinian leaders, Arab governments and Western allies have long urged Mr Trump not to proceed with the embassy relocation, which would go against decades of United States policy by granting de-facto U.S. recognition of Israel's claim to all of Jerusalem as its capital.