Volunteer Responder Incentive Protection Act Restored for 2020 Tax Year

On December 20, President Trump signed into law appropriations legislation (H.R. 1865), which includes language restoring the Volunteer Responder Incentive Protection Act (VRIPA) in the 2020 tax year. VRIPA exempts nominal volunteer recruitment and retention incentives from being subject to federal income tax and reporting requirements for the 2020 tax year. Specifically, H.R. 1865 exempts property tax benefits and up to $600 per year in other incentives, such as stipends, that volunteer fire and EMS personnel receive as a reward for their service.

VRIPA was first enacted in 2007 and was in effect from 2008-2010. Originally, VRIPA exempted property tax benefits and up to $360 per year of other incentives. VRIPA expired in 2011 and 2020 will be the first year that it is back in effect since then. In addition to restoring VRIPA for the 2020 tax year, H.R. 1865 raises the maximum exempted benefits amount for non-property tax benefits from $360 to $600 per year.

“I’d like to thank Representatives John Larson (D-CT) and Mike Kelly (R-PA), Senators Susan Collins (R-ME) and Ben Cardin (D-MD), and all of the bi-partisan cosponsors of the Volunteer Responder Incentive Protection Act for their support in getting this legislation passed,” said National Volunteer Fire Council (NVFC) Chair Steve Hirsch. “Federal taxation of volunteer benefits reduces their value as an incentive and creates administrative challenges for small departments that have to essentially set up a payroll system even for small stipends. Passage of this bill will help volunteer departments and personnel in 2020, while improving our chances of making VRIPA permanent.”

When VRIPA was in effect previously, the IRS issued guidance on how volunteer emergency services agencies and personnel could take advantage of it. The NVFC is in the process of working with Congress and the IRS to develop updated guidance.

While H.R. 1865 restores VRIPA for one year, passage of separate legislation is required to exempt nominal volunteer incentives permanently. You can use the NVFC’s Legislative Action Center to ask Congress to make VRIPA permanent.