August 21, 2008 | Read Time: 2 minutes
Momentum seems to be building on Capitol Hill for legislation that would increase the tax deduction for people who use their automobiles as part of their volunteer work.
Under federal law, volunteers who drive their cars for charitable purposes may deduct 14 cents a mile for their car costs or be reimbursed by a charity at that rate without the payment’s being subject to federal income tax.
More and more members of Congress have said that the rate is too low, particularly as gas prices have soared. A dozen bills are now pending that would change the rate in some way, according to Independent Sector, a coalition of nonprofit organizations.
The latest measure — the Giving Incentives to Volunteers Everywhere Act of 2008, or GIVE Act — would permanently raise the deduction rate for volunteers to 70 percent of the mileage rate for business use of a car.
Under current law, the Internal Revenue Service continually adjusts the business rate for inflation and other costs without the need for Congressional approval, but it cannot make such an adjustment in the charitable rate.
Because the business rate is now set at 58.5 cents per mile, the GIVE Act would allow volunteers to deduct 70 percent of that rate, or 41 cents a mile, for their car costs.
What’s more, the GIVE Act would allow volunteers to be reimbursed by a charity up to the business rate without the payment’s being subject to federal income tax.
“It’s almost inexplicable that there is such a gap between the business rate and the charitable rate,” said Sen. Charles E. Schumer, a New York Democrat and a sponsor of the bill. “This fix will allow volunteers to keep doing their important work despite the pain at the pump.”
Other Senate sponsors of the bill (S 3429) are Christopher J. Dodd, a Connecticut Democrat; John Ensign, a Democrat from Nevada; and Russell D. Feingold, a Wisconsin Democrat.
Scores of nonprofit organizations endorsed the GIVE Act in a letter to Mr. Schumer and Mr. Ensign, including the American Heart Association, the American Red Cross, Independent Sector, and the YMCA of the USA.
