Volunteer Mileage Reimbursement and Deduction

The Issue
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.

The Internal Revenue Service (IRS) has the authority to regulate volunteer mileage rates for business and medical/moving purposes, but not for charitable activities. The charitable rate can only be adjusted through the legislative process, and has remained unchanged since 1997.

Latest News
President's budget would increase mileage rate

The President's budget for fiscal year 2017, released on February 9, 2016, would set the standard mileage rate for the charitable contribution deduction equal to the rate set by the IRS for purposes of the medical and moving expense deduction. For tax year 2016, the rate for medical and moving expenses is 19 cents per mile. It would likewise be adjusted annually to reflect the estimated variable costs of operating a vehicle.

The IRS on December 17, 2015 announced the standard mileage rates used to calculate the deductible costs of operating an automobile for business, medical/moving, and charitable purposes for 2016. The rates are:
  • 54 cents per mile for business miles driven; down from 57.5 cents in 2015
  • 19 cents per mile for medical/moving purposes; down from 23 cents in 2015
  • 14 cents per mile driven in service of charitable organizations (same as 2015, no legislative action taken to change it)

Legislation from the 113th Congress
In March 2013, Sen. Tom Petri (R-WI) introduced the Charitable Driving Tax Relief Act (H.R. 1212) which allows volunteers for recognized nonprofits to exempt from their taxable income any reimbursements they have received for driving a passenger vehicle as part of their volunteer work. Reimbursement is deductible up to the level of for-profit mileage reimbursement, and can only be claimed by drivers working on a volunteer basis.

The proposed legislation is similar to previous legislation from Sen. Benjamin Cardin (D-MD), who introduced the Giving Incentives to Volunteers Everywhere (GIVE) Act in 2009, to address the inequities between the charitable rate and those for business and medical/moving purposes. The GIVE Act would have:

  1. Exempted from a volunteer’s taxable income any reimbursement by a charity for mileage up to the business rate;
  2. Given 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. Raised the volunteer mileage deduction immediately to the medical/moving rate and ensure it doesn't fall below that rate in the future.

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