Are There Tax Incentives for Organ Donations?

Some states provide tax breaks for body part donations but not the federal government.

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It's illegal in the United States to sell your kidneys or other body parts. But donating your organs to others who need a transplant is perfectly legal and strongly encouraged. If you donate a kidney or other body part, can you deduct the value of the organ as a charitable gift on your taxes? The value of such donations could be substantial, since people have reportedly paid $150,000 or more for human kidneys on the black market.

Seventeen states provide special tax breaks to residents who donate kidneys, portions of their liver, pancreas, intestines, or bone marrow for transplantation. These tax benefits are only available to living donors who donate their own body parts or, in some states, to those whose living dependents make such donations. A special state income tax deduction of up to $10,000 for donation-related expenses such as travel, lodging, and lost wages is available to living donors of such organs in the following states: Arkansas, Connecticut, Georgia, Iowa, Louisiana, Minnesota, New Mexico, New York, North Dakota, Ohio, Oklahoma, Pennsylvania, Rhode Island, Virginia, and Wisconsin.

Unfortunately, these state tax deductions aren’t worth all that much—on average, a maximum of $650. This is far less than the actual costs organ donors face for lodging, lost wages, and medical costs. For example, it has been estimated that the cost of being a living kidney donor ranges from $907 to $3,089 depending on the type of surgery involved. Thus, it should come as no surprise that a study found that these state tax breaks have not led to an increase in organ donations.

A couple of states have more generous breaks for donors. For example, Utah has enacted a $10,000 organ donation tax credit that living donors may take to cover their expenses. Idaho has a similar tax credit. So, if you want the largest tax break possible for donating an organ, move to Utah or Idaho.

As for federal tax breaks, organ donors are not allowed to take a charitable deduction on their federal income taxes for the value of their organs. This may not seem fair, since charitable deductions are allowed for donating most other types of property to charity. But, as a practical matter, there would be problems valuing such donations. In addition, charitable donations are never allowed for gifts to specific individuals. You must make a gift to a tax qualified charity to take a deduction.

In fact, you get no special federal tax deduction or credit of any kind when you donate a body part. You can include the expenses you incur from being an organ donor along with your other health expenses during the year and deduct these as an itemized personal deduction. Such expenses may include lodging and transportation (but not lost wages). However, if you’re under 65 year of age, your medical expenses are deductible only if, and to the extent, they exceed 10% of your adjusted gross income. This eliminates or greatly reduces this deduction for most people.

Legislation has been put forward over the years to give organ donors a special tax credit, but has never been enacted.

by: , J.D.

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