Volunteer Mileage Reimbursement and Deduction
The Issue
A charity’s ability to reimburse volunteers for expenses incurred while volunteering plays a huge role in nonprofit organizations’ abilities to recruit and retain volunteers, especially as gas and energy prices continue to soar. Currently, charities may reimburse volunteers, on a nontaxable basis, up to the charitable mileage rate of 14 cents per mile. That rate has not changed since 1997 and no longer covers the price of gas. In addition, if charities reimburse their volunteers more than the 14 cent mileage reimbursement rate, volunteers pay taxes on the additional amount because it is treated as income thus, taxing individuals for donated services.
MANP’s Position
Congress should take action to exempt reimbursement of mileage from income and raise the volunteer standard deduction to a reasonable rate.
Congressional Action:
More than 12 proposals were submitted to the 110th Congress in the spring of 2008. All proposals would have either (1) allowed nonprofit organizations to reimburse volunteers (without income tax consequences) for mileage driven for charitable purposes up to the business mileage rate, or (2) increased the mileage deduction allowed for charitable purposes.
Two proposals gained momentum in the Senate. The first being S.3429 
, the Giving Incentive for Volunteers Everywhere (GIVE) Act of 2008. The Act was sponsored by, Senators Chuck Schumer (D-NY), John Ensign (R-NV), Russ Feingold (D-WI), and Christopher Dodd (D-CT). GIVE did two things:
- Deduction Rate: The bill would have raised the volunteer standard deduction rate from the current 14 cents per mile to 70 percent of the standard business deduction rate. This would have set the rate at 41 cents/mile and the rate would have been adjusted annually.
- Reimbursement: The bill would have exempted from taxable income reimbursements from charities for mileage traveled by a volunteer up to the business rate (currently 58.5 cents/mile).
The other bill, S.3246
, the Fair Deal Volunteers Act, sponsored by Maine Senator Olympia Snowe and Senator Ben Cardin, proposed to raise the charitable mileage rate to 27 cents a mile (or 46% of the standard business mileage rate) as opposed to the GIVE Act’s rate of 41 cents a mile (or 70% of the standard business mileage rate). The Fair Deal Volunteers Act did not support exempting from taxable income reimbursements from charities for mileage traveled by a volunteer up to the business rate.
By the end of the session both the house and senate had merged these two bills into a newly formed GIVE Act, S.3532, and its companion bill in the House, H.R.6854. Though these acts did not gain final approval and become law, the final version looked like this:
1. The bill would exempt from a volunteer’s taxable income any reimbursement by a charity for mileage up to the business rate.
2. The bill would 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.
3. The bill would raise the volunteer mileage deduction immediately to 27 cents per mile and ensure it does not fall below the rate for medical mileage expenses in the future (currently 27 cents per mile).
We expect this bill to re-emerge next session.
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