Volunteer Mileage Reimbursement and Deduction

Due to the fluctuating price of gasoline and the current economic crisis, volunteers have cut back on their use of vehicles for charitable purposes - hurting the people they intend to serve and making it difficult for charities to recruit and retain volunteers. The impact on volunteerism is being exacerbated by two problems in current tax policy: 1) individuals must treat as income any mileage reimbursements by the charities in excess of 14 cents per mile, and 2) the rate at which volunteers may deduct the mileage they drive on behalf of a charity is fixed at only 14 cents per mile. Congress should take action to exempt reimbursement of mileage from income and raise the volunteer standard deduction to a reasonable rate.

Current Status Update
On January 14, Senator Benjamin Cardin (D-MD) introduced S 243, the Giving Incentives to Volunteers Everywhere (GIVE) Act of 2009, with the support of Senate Finance ranking member Chuck Grassley (R-IA) and Senators Chuck Schumer (D-NY), Olympia Snowe (R-ME), and John Ensign (R-NV). In collaboration with Senate action, Representatives John Lewis (D-GA) and Devin Nunes (D-CA) introduced the GIVE Act of 2009 (HR 524) in the House on the same day.

The GIVE Act would do three things:

1. Exempt from a volunteer’s taxable income any reimbursement by a charity for mileage up to the business rate (GIVE Act provision);
2. Give the Treasury Department authority to change the volunteer mileage deduction rate, which has been fixed in statute at 14 cents per mile since 1997; and 
3. Raise the volunteer mileage deduction immediately to 24 cents per mile and ensure it doesn't fall below the rate for medical mileage expenses in the future (currently 24 cents per mile). 

On January 8, Representatives Todd Platts (D-PA) reintroduced legislation, HR 345, that if enacted would increase the standard mileage rate for charitable purposes to the standard mileage rate established by the Secretary of the Treasury for business purposes.

We continue to believe that the volunteer mileage deduction should be higher, but believe that support for the GIVE Act as part of the recovery legislation at this time is in the best interests of volunteers and nonprofits.

Take Action
Contact your Senators and Representatives ask them to pass the GIVE Act (S 243/ HR 524). We have provided talking points that you can use to make your point.

Background

• Business and Moving/Medical Rate: The IRS has released the 2009 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, medical/moving, and charitable purposes. The business rate for 2009 is 55 cents per mile and the rate for moving and medical transportation expenses is 24 cents per mile. The rate for charitable purposes is set by law and is unchanged at 14 cents per mile. The revised vehicle mileage rates went into effect January 1, 2009.
  
• As part of the Emergency Economic Stabilization Act of 2008 (H.R.1424), Congress enacted volunteer mileage assistance for driving related to Midwestern disaster relief. That law, which expired at the end of 2008, raised the volunteer mileage deduction to 41 cents per mile and exempted from taxation mileage reimbursements from charities up to the business rate of 58.5 cents per mile.
  
• Taxing Reimbursements: Current law allows charities to reimburse volunteers, on a nontaxable basis only, up to the charitable mileage rate of 14 cents per mile. Alternatively, volunteers are permitted to deduct their “out of pocket” expenses incurred in providing donated services — when those expenses are not reimbursed.
  
• Volunteer Mileage Rate: Congress first set at 12 cents per mile the statutory deduction rate for volunteers who use their vehicles for charitable purposes as part of the Deficit Reduction Act of 1984 (P.L. 98-369). The rate was slightly raised to 14 cents per mile under a provision contained in the Taxpayer Relief Act of 1997 (P.L. 105-34).
  
• Temporary Increase in 2005-2006: The charitable mileage rate was raised temporarily in 2005 and 2006 to 70 percent of the standard business mileage rate as part of the Katrina Emergency Tax Relief Act of 2005 (P.L.109-73). The law also provided that mileage reimbursements up to the business rate to charitable volunteers could be exempted from income when service was related to hurricane relief. The Joint Committee on Taxation (JCT) calculated the “cost” of these provisions at $31 million.
  

Last Updated: April 28, 2009