Katrina-Related Charitable Provisions Passed By House

Katrina-Related Charitable Provisions Passed By House
Measure Would Encourage Donations From Individuals, Employers

WASHINGTON, D.C., Sep 15 - U.S. Rep. Mark Souder praised the House today for passing H.R. 3768, the Katrina Emergency Tax Relief Act of 2005, which includes some important incentives for charitable donations related to Hurricane Katrina. The bill, which Souder supported, passed the House without objection.

"I've been working for a number of years to broaden incentives for charitable giving," Souder said. "Today's bill is a step forward, but its incentives are specific to Hurricane Katrina-related efforts. As a nation, we have to try to ensure that total charitable contributions increase this year. Otherwise, we will have forgotten the needy elsewhere in the nation. I will continue to push for an expansion of these types of incentives to all charitable giving."

The Katrina Emergency Tax Relief Act would:

- encourage cash donations by individuals. Under current law, individuals may deduct charitable donations up to 50 percent of their adjusted gross income. Deductions for charitable donations are further limited by the phase-out of itemized deductions. Under H.R. 3768, cash donations related to Hurricane Katrina would be exempt from the 50-percent income limitation and the phase-out of itemized deductions, if the donation were made before January 2006.

- encourage cash donations by corporations. Under current law, corporations may deduct charitable donations up to 10 percent of their taxable income. H.R. 3768 would waive the 10-percent income limitation for cash donations related to Hurricane Katrina, if the donation were made before January 2006.

- increase the mileage reimbursement rate for charitable donation deductions. Individuals may claim a tax deduction for the costs associated with using a personal vehicle for charitable work. The deduction is calculated by using a mileage reimbursement rate of 14 cents-per-mile. The reimbursement rate for business use is set periodically through IRS guidance and currently stands at 48.5 cents-per-mile. The House-passed legislation would set the mileage reimbursement rate for charitable contributions at 70 percent of the standard business mileage rate.

H.R. 3768 has been sent to the Senate for further consideration.

http://souder.house.gov/News/DocumentSingle.aspx?DocumentID=34422