Now that the effects of last year's tax reform bill are being felt, the proposals to reform the reform (say that quickly three times) keep rolling in. Last month, Sen. Bob Casey (D-PA) put forth a bill to reinstate unreimbursed job expenses. This week, Rep. Richard Nolan (D-MN) introduced H. R. 5662, also known as the Volunteer Driver Tax Appreciation Act of 2018. The purpose of the bill is to:
To amend the Internal Revenue Code of 1986 to equalize the charitable mileage rate with the business travel rate.
What sort of differential are we talking? For 2018 (you can find more information here), the Internal Revenue Service (IRS) optional standard mileage rates for the use of a car, van, pickup or panel truck are 54.5 cents per mile for business miles driven but a mere 14 cents per mile driven in service of charitable organizations.
Under the Senate and House tax reform proposals, the charitable donation deduction claimed on Schedule A, including a deduction for charitable miles driven, was slated to stay in place. Additionally, under the House proposal, the mileage rate for charity would have been indexed for inflation, as it is each year for business and moving mileage. However, while the final version of the tax reform bill did retain the charitable donation deduction, it did not include an adjustment to the charitable mileage rate.
That means that the old rate remains in place. How old? It's been 14 cents per mile, as fixed by Congress, since 1997. To put that into perspective, according to the Bureau of Labor and Statistics, the average price of gas last month was $2.63/gallon. For the same month in 1997, it was less than half that rate, or $1.29/gallon. Yet, the charitable mileage rate remains the same.
While there has long been a clamor from charities and taxpayers to change the rate, now there's a twist. As the charitable deduction becomes less of an issue, since changes to Schedule A and the doubling of the standard deduction necessarily mean that fewer taxpayers will itemize, the rate may become less about the deduction and more about the reimbursement rate. Taxpayers who opt not to claim the charitable deduction may be reimbursed by charities for their volunteer miles on a per-mile basis, income-tax-free, up to the charitable mileage rate.