Gas Tax Increases and Church Budgets
As more states reform and increase fuel taxes, the costs for reimbursing travel may go up.
Gas Tax Increases and Church Budgets

The News

From Institute on Taxation and Economic Policy (ITEP):

Illinois now enjoys the distinction of being the 31st state to raise or reform its gas tax this decade, and the fourth state to do so this year, under a bill signed into law by Gov. J.B. Pritzker. While state tax policy can be a contentious topic, there has been a remarkable level of agreement on the gasoline tax. . . . And a growing group of states has decided not just to fix past problems, but to plan for the future as well. Eight states have abandoned fixed-rate gas taxes (flat cent-per-gallon taxes) since 2013 in favor of variable-rate gas tax structures that will allow them to raise sustainable gas tax revenues for the long haul. In total, 22 states (home to 59 percent of the U.S. population) now levy variable-rate gas taxes under which the tax rate tends to rise over time.

ITEP created a helpful chart of states that have passed gas tax increases or reforms. ITEP also provides further details for the four states that have made changes so far this year: Alabama, Arkansas, Illinois, and Ohio.

The Church Law & Tax Take

Churches often provide mileage reimbursements to pastors and staff who drive their personal vehicles for church-related matters. Reimbursable trips include activities like hospital visitations, lunch meetings, and drives to and from camps and retreats. As the costs for gas go up through things like taxes, so too does the possibility for mileage rate increases related to reimbursements.

The Internal Revenue Service’s business mileage reimbursement rate for 2019—which many churches follow—is 58 cents per mile (up 3.5 cents from 2018). The rate for reimbursing volunteers who drive their personal vehicles on church business is set by Congress and has remained fixed for years at 14 cents per mile.

As the agency assesses the various costs influencing vehicle travel for 2020, these continued developments with gas tax reform and related increases no doubt will factor into the equation. The IRS also tracks the actual costs of gas as it makes its calculation. Prices at the pump have been steadily rising in recent weeks, USA Today recently reported. Economic, political, and weather-related volatility may drive prices higher this summer and fall, which will likely prompt a higher recommended rate from the IRS, too.

Church leaders should anticipate further cost increases with vehicle travel, especially if they base their business mileage reimbursements on what the IRS sets. This means budgeting accordingly for 2020 this fall. It also means wisely anticipating continued increases in the years to come.

For more help with business reimbursements, including mileage, check out the Church & Clergy Tax Guide.

Matthew Branaugh is editor of content and business development for Christianity Today’s Church Law & Tax.

This content is designed to provide accurate and authoritative information in regard to the subject matter covered. It is published with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. "From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations."

Due to the nature of the U.S. legal system, laws and regulations constantly change. The editors encourage readers to carefully search the site for all content related to the topic of interest and consult qualified local counsel to verify the status of specific statutes, laws, regulations, and precedential court holdings.

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