Volunteer Mileage Reimbursement and Deduction

Legislative Solutions for Volunteer Mileage Deduction
There are currently twelve legislative solutions proposed in the 110th Congress that would either (1) allow nonprofit organizations to reimburse volunteers (without income tax consequences) for mileage driven for charitable purposes up to the business mileage rate, or (2) increase the mileage deduction allowed for charitable purposes.

• Senators Chuck Schumer (D-NY) and John Ensign (R-NV) introduced a bill to address the impact of high gas prices on charitable volunteers. Their bill, S.3429, The Giving Incentives to Volunteers Everywhere Act (GIVE Act), does two key things:
  1. Deduction Rate : The bill would raise the volunteer standard deduction rate from the current 14 cents per mile to 70 percent of the standard business deduction rate. This would set the rate at 41 cents/mile and the rate would be adjusted annually.
  2. Reimbursement : The bill would exempt from taxable income reimbursements from charities for mileage traveled by a volunteer up to the business rate (currently 58.5 cents/mile).
     
• Reimbursement at the Business Rate: Two bills pending in Congress would allow volunteers who use their automobiles for charitable purposes to exclude from their gross income any reimbursements from charities for the vehicle use up to the business rate (currently 58.5 cents per mile).

• S. 403 was introduced by Senator Russ Feingold (D-WI) at the beginning of 2007 and H.R.1827 was introduced by Representative Thomas Petri (R-WI).
• The Joint Committee on Taxation estimated that the reimbursement provision would “cost” $2 million over the five-year fiscal period from 2008-2012 and $4 million over the period 2008-2017.

• Volunteer Deduction Rate: Numerous bills have been introduced to revise the volunteer deduction rate, either by adopting an adjustable rate set by the IRS or by raising the flat rate.

• Adjustable Rate : There are currently three separate bills to replace the flat rate of 14 cents per mile with an adjustable rate:

• Business Rate – 58.5 cents: The highest volunteer deductible rate would be set at the business rate which (currently 58.5 cents per mile) under a bill, H.R.2020, introduced by Representative Todd Platts (R- PA) and S.3421 introduced by Senator Robert Casey (D-PA). Representative Robert E. Latta (R-OH) introduced a bill, H.R.6675, to amend the Internal Revenue Code to increase to 58.5 cents/mile the standard charitable mileage rate for delivery of meals to elderly, disabled, frail and at risk individuals.
• Enhanced Moving/Medical Rate – 36 cents: Between these is a proposal (H.R.6368) by Representative Kevin Brady (R-TX) that would set the volunteer rate at the moving/medical rate, and then increase all of them temporarily by 133 percent to $36 cents per mile.
• Adjustable Rate: The lowest proposal, The Fair Deal Volunteers Act, S.3246, introduced recently by Senators Ben Cardin (D-MD) and Olympia Snowe (R-ME), would eliminate the flat rate of 14 cents per mile for volunteers and replace it by granting authority to the Internal Revenue Service to set a new rate.
  
  
• Flat Rate: Senator Charles E. Schumer (D- NY) and Representative John Lewis (D –GA) would permanently increase the standard mileage rate for calculating the tax deduction for the use of an automobile for charitable purposes from 14 to 40 cents per mile. Their bills are S.3032 and H.R.6283, respectively.
  
  
• Temporary Approach: Both measures listed below are similar to provisions enacted as part of the Katrina Emergency Tax Relief Act of 2005.

• Senator Chuck Grassley (R-IA) and other Midwestern Senators proposed a bill, S.3332, that would temporarily raise the volunteer rate for flood relief work to 70 percent of the business rate (resulting in a deduction of 41 cents per mile) and permit volunteers to disregard reimbursements from charities for mileage up to the business rate. The measure is aimed at aiding the victims of the recent floods and tornadoes in their region.
• Senate Finance Committee Chairman Max Baucus (D-MT) introduced a new bill July 24, 2008, S.3335, the “Jobs, Energy, Families and Disaster Relief Act of 2008,” that expands the scopoe of S.3322 to cover all federally declared disasters this year and in 2009. It would temporarily raise the volunteer mileage deduction to 70 percent of the standard business rate and exclude from income mileage reimbursements to volunteers from charities, but only for transportation to related disaster relief.

Last Updated: August 7, 2008