Sen. Charles E. Grassley, the senior Republican on the Senate Finance Committee, says key colleagues have agreed to work to get a provision that would increase the tax deduction for people who use their vehicles as part of their volunteer work for charities into the Senate version of the economic-stimulus package.
Mr. Grassley said in a statement that he sought to offer an amendment on the mileage provision when the finance committee considered its part of the economic-stimulus bill earlier this week.
He said he withdrew the amendment after he received a commitment from fellow Senators — including Max Baucus, the Montana Democrat who chairs the committee — to deal with the mileage provision when the economic-stimulus legislation comes to the Senate floor.
“The stimulus [package] focuses on paying jobs, but the non-paying jobs are just as important for a strong society, especially providing help in an economic crisis,” Mr. Grassley said.
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 being subject to federal income tax.
Mr. Grassley is a co-sponsor of a bill introduced earlier this year that would allow the Internal Revenue Service to continually adjust the mileage rate for charitable activities for inflation and other costs without seeking Congressional approval as the IRS already does for business, medical, and moving expenses.
The current business rate is 55 cents per mile; the medical and moving rate is 24 cents.
Under the bill — the Giving Incentives to Volunteers Everywhere Act, or GIVE Act — the IRS could set the rate as high as the business rate but no lower than the deduction set for medical and moving expenses.
Sponors of the measure said that despite the recent decline in oil prices, the cost of a gallon of gas still outpaces the current mileage deduction limit.
“Unfreezing the charitable-mileage rate allows those charities that are on the front lines of the economic crisis to provide some incentives to volunteers,” said Senator Grassley. “Giving the IRS the discretion to change the charitable-mileage rate is a no-brainer from a tax policy perspective.”
