A package of tax breaks for charitable activities cleared a final hurdle, with President Bush signing them into law as part of the bill the U.S. House of Representatives passed earlier Friday to provide a $700-billion rescue package for the nation’s financial systems.
The legislation allows up to $100,000 donated to charities without a tax penalty when given from retirees’ individual retirement accounts.
That provision had been among the items that had stalled in previous attempts because of disagreements between the House and Senate over how much of the tax difference from the change should be offset by other spending cuts or tax increases.
But senators made an offer that was difficult to refuse by attaching the tax breaks to the Wall Street bailout bill it passed on Wednesday.
Additional provisions will renew and extend other breaks related to charitable giving, including special deductions that businesses may take for gifts of food and donations of books and computers to schools.
Help for Flood Victims
The legislation also creates tax incentives for charitable giving to help victims of summer storms, tornadoes, and floods in the Midwest.
People who use their cars and other vehicles to provide disaster relief in the Midwest will be able to deduct 41 cents per mile — 70 percent of the current business mileage rate — through the end of 2008. The rates had been 14 cents per mile for charitable activities and 58.5 cents for business activities.
Volunteers in the Midwest can also exclude from their income any reimbursements from charities for the use of their vehicles, up to the amount of the standard business rate, through the end of 2008.