October 2, 2008 | Read Time: 1 minute
Two groups of senators with competing bills have agreed to compromise and combine efforts to better their chances of passing legislation that would increase the tax deduction for people who use their vehicles 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 vehicle costs. Many members of Congress have said the rate is too low, especially as fuel prices have soared.
Earlier this year, Sen. Benjamin L. Cardin, a Maryland Democrat, and others introduced a bill that would allow the Internal Revenue Service to continually adjust the mileage rate for charitable activities to account for inflation and other costs without seeking Congressional approval, as the tax agency already does for business, medical, and moving mileage expenses.
The current business rate is 58.5 cents per mile; the medical and moving rate is 27 cents.
Then Sen. Charles E. Schumer, a New York Democrat, and others introduced a measure that would permanently raise the mileage deduction for volunteers to 70 percent of the rate the IRS sets for the business use of a vehicle. At the current business rate of 58.5 cents per mile, volunteers would be able to deduct 41 cents a mile.
The new compromise bill (S 3532) — written by Senators Cardin and Schumer and colleagues who were sponsors of the previous legislation — would allow the IRS to continually adjust the mileage rate for volunteers. Under the bill, the IRS could set the rate as high as (or higher than) the business rate but no lower than the deduction set for medical and moving expenses.
