Volunteers who drive their vehicles when they perform work on behalf of a nonprofit are restricted in tax law to deducting only 14 cents per mile, a rate set in statute decades ago. Volunteers who are reimbursed by the charity for the miles they drive must pay income taxes on any amount in excess of 14 cents per mile. Congress should eliminate the distinction between the Standard Business Mileage Rate (62.5 cents per mile as of July 1, 2022) and the substandard Charitable Mileage Rate to create a single rate, set the same way (flexibly by the IRS), and treated the same way.
Why It Matters
Higher gas prices, poor tax incentives, and increased transportation and energy costs have caused many individuals to stop donating their time and talent to helping others. Eliminating the difference between the charitable mileage rate and the standard business rate will allow volunteers to defray one of the largest costs associated with volunteering.
The current unfair mileage rate restriction puts at risk many Americans, particularly those in rural areas who are served by volunteers. Individuals who depend on getting Meals-on-Wheels dinners delivered, disabled veterans who depend on volunteers to drive them to doctors, and homebound seniors who depend on volunteers to deliver prescriptions are threatened because volunteers can no longer afford to help.
Where We Stand
The National Council of Nonprofits is committed to strengthening and expanding incentives for individuals who give their time and money to the organizations whose missions they support.
Status
As a partial solution, Rep. Stauber (R-MN) introduced the Volunteer Driver Tax Appreciation Act of 2022 (H.R. 7432) to raise the volunteer mileage rate to the standard business rate for volunteers who drive their vehicles on behalf of charitable nonprofits to transport property or individuals. On July 1, Representatives Craig (D-MN) and Stauber (R-MN) introduced a new variation of the volunteer mileage bill, Tax Emergency Adjustment for Mileage Volunteers (TEAM Volunteers) Act. The new bill would raise the volunteer mileage rate from 14 cents/mile to the full business mileage rate for two years “in order to address the financial burden that rising gas prices and inflationary pressures have placed on volunteer drivers.” Following those two years, the legislation would set the permanent rate for volunteer drivers at $0.24 to adjust for inflation and the IRS would be responsible for adjusting the volunteer mileage rate annually.” The volunteer mileage rate is the amount that is tax-deductible when nonprofit volunteers drive on behalf of the organization. The Charitable Driving Tax Relief Act, introduced in 2013, failed to pass.
Additional Resources
- Internal Revenue Service Bulletin 2022 Standard Mileage Rates, Internal Revenue Service.
- Letter to Senate Finance Committee Leaders, signed by the National Council of Nonprofits, Idaho Nonprofit Center, Oregon Association of Nonprofits, Meals on Wheels America, and Independent Sector, Dec. 1, 2022.
- Letter to Ways and Means Committee leaders, signed by Independent Sector, Meals on Wheels America, and the National Council of Nonprofits, Nov. 21, 2022.