States Offer Organ Donors Tax Breaks

Published February 1, 2007

As chairman of organ transplantation at University of Wisconsin Hospital in Madison, Dr. Hans Sollinger has seen hundreds of individuals and families undergo financial and emotional stress after donating an organ.

So when he learned state Rep. Steve Wieckert (R-Appleton) was working on legislation to ease the financial burden for Wisconsin residents who donate an organ, he was “excited.” After the legislation became law in 2004, he was thrilled.

He’s happy to know that versions of “Cody’s Law,” as it is known, have been adopted in 10 other states and are being considered in more than two dozen others.

“The law as originated was very innovative,” Sollinger said.

“There was some discussion with the Department of Justice that any compensation [for organ donation] would be against the law,” Sollinger continued. “When I found out that Mr. Wieckert’s office was working on that problem, I was excited but at the same time pessimistic because I was aware of the Justice Department position. But he found a way to help donor families without violating federal law by restricting the tax credit to expenses.”

Travel, Lodging, Lost Wages

Wieckert wrote the law to allow donors to deduct from their Wisconsin taxable income costs they incur from donating all or part of a liver, pancreas, kidney, intestine, lung, or bone marrow. Eligible expenses include travel, lodging, and lost wages, up to $10,000.

Actual savings for organ donors work out to $600 to $700, because it is a tax deduction and not a credit. In Idaho, where a version of the law was adopted in 2006, the state allows a $5,000 credit, said Scott Becher, Wieckert’s chief of staff.

A few hundred dollars may not seem like much, but any savings is big to many prospective organ donors, Sollinger said.

“Obviously, donating a kidney is hard enough for any family, regardless of whether they are rich or poor,” Sollinger said. “It’s a big commitment, especially for people on the lower end of the economic scale and in a rural state like Wisconsin, where you have long drives to get to hospitals. They must stay overnight, come several times for evaluation. And kidney disease seems to affect lower economic groups.

“This law makes it a lot easier on donors and their families,” Sollinger said.

Life Saved, Income Lost

Wieckert said he came up with the idea for the tax break after learning of Cody Monroe of Menasha, Wisconsin, who was five years old in December 2001 when his kidneys stopped working. Cody received a lifesaving kidney from his father Marty, a truck driver who lost three months of wages before he could return to work.

“I wanted to find a way to help people in this kind of situation,” Wieckert said.

“I think this is a wonderful concept to help people who donate organs,” Wieckert continued. “It can be a real strain. This lifts some of that strain. No one makes money on organ donation. They just lose a little less.”

Troy Zimmerman, director of government relations at the National Kidney Foundation, said the organization likes the Cody’s Law concept “because all it does is assist living donors with expenses. Medicare and private insurance won’t cover travel, hotels, and other incidental expenses. This helps remove a disincentive to donation.”

Steve Stanek ([email protected]) is managing editor of Budget & Tax News.