MN advocates for tax relief for rural volunteer drivers

When a change in federal tax law in 2017 meant that the mileage reimbursements over $600 per year received by volunteer drivers were taxed like regular employment income, the Arrowhead Transit’s (MN) volunteer driver program lost nearly two hundred of its three hundred volunteer drivers. The drivers work for a nonprofit program that transports rural seniors to and from non-emergency medical appointments at no charge. Volunteers are not paid for their time but do receive the federal mileage reimbursement for miles driven.

Such mileage payments, which are common for business or government travel while using a private vehicle, are typically not taxed, since it is considered a reimbursement for costs associated with driving (gas, maintenance, depreciation).
Last week Arrowhead Transit Director Brandon Nurmi, and Associate Director of Finance Colette Hanson were in Washington, D.C. lobbying for tax relief for volunteer drivers in the country.

However, the 1099 requirement meant it was costing volunteer drivers more than they received in mileage reimbursement, since it bumped up their total income. The vast majority of these volunteer drivers are retired seniors, and many of those were financially impacted by the change that required 1099 reporting.

A proposed bill, introduced last April, is currently advancing through the legislative process, and has received bipartisan support from a diverse coalition of representatives, stakeholders, and citizens.

In a statement of support, Rep. Craig spoke about the far-reaching benefits of the proposed bill. “This legislation transcends mere tax relief— it is an investment in the very health and well-being of our cherished rural communities. Volunteer drivers are the unheralded champions, and they deserve every iota of support we can muster.”

Dominick Olivanti, public relations coordinator for Arrowhead Transit, said the program had also worked on a pilot program to get college students at Minnesota North- Mesabi to spend time as volunteer drivers, but the 1099 requirement meant it was costing these students more than they received in mileage reimbursement, since it bumped up their total income. The vast majority of these volunteer drivers are retired seniors, and many of those were financially impacted by the change that required 1099 reporting. “We need to fix this,” he said.