Congress Considers Expanding Tax Break for Donated Food

Congress is considering legislation that would make permanent a tax deduction for businesses that donate their surplus food to charity.

The deduction, which expires at the end of the year, allows businesses to write off the cost of donated food, plus one-half the gain that would have been realized had the product been sold. The temporary deduction was part of the Pension Protection Act of 2006.

Rep. Sander Levin, a Michigan Democrat and the sponsor of the bill, said the deduction should be made permanent because food pantries and soup kitchens had been having difficulty getting enough food to feed the more than 25 million people who seek emergency food annually.

Mr. Levin cites a report from America’s Second Harvest, which has seen a 2- percent increase in food donated in the 2007 fiscal year — an increase he said was fueled by the tax deduction.

America’s Second Harvest also reported a 28-percent increase in donations of fresh fruits and vegetables. That increase was largely the result of donations from farms and ranches that took advantage of the deduction, Mr. Levin said.

“This tax-incentive program is working to encourage the donation of healthy foods to people in need,” Mr. Levin said. “We must act to make it a permanent part of the tax code so it becomes a permanent part of the food-donation plans for these eligible businesses.”

Rep. Charles Rangel, the chairman of the House Ways and Means Committee, had included an item in his recently proposed tax-overhaul bill that would extend the food donation incentive for one year.