States Offer Tax Breaks to Spur Organ Donation

Tax day April 15, 2004 always will have significance for Ed Nicholson. On that day, the 54-year-old Eau Claire, Wis., man donated one of his kidneys to his ailing brother, Harry, 48.

The gift saved his brother’s life.

It also made Nicholson one of the first “living donors” in Wisconsin who can take advantage of a new statute granting a state income-tax deduction of up to $10,000 for some costs associated with donating an organ.

The law covers the transplant of a kidney as well as donation of bone marrow or part of a pancreas, intestine or lung.

Granting a state tax deduction is the latest legislative tactic to boost the rate of organ donation, and Wisconsin state Rep. Steve Wieckert (R-Appleton), the bill’s author, is working to convince other states to follow suit. Wieckert and his staff said they’ve contacted the health committee chairs in every statehouse to pitch the idea, and their efforts have met with some success.

“The more states that introduce this, the more helpful that it’ll be. … Every state that does this is saving more lives,” Wieckert told Stateline.org.

The law grabbed national headlines after passing the Wisconsin Legislature in 2003 and becoming effective in January 2004. Since then, Georgia lawmakers approved an identical bill in late April that becomes effective Jan. 1, 2005, and similar measures were introduced in 10 other states: Connecticut, Illinois, Indiana, Massachusetts, Minnesota, New Jersey, New York, Pennsylvania, Rhode Island and South Carolina.

“Wisconsin took a unique approach to addressing this issue, and that definitely attracts the attention of other states,” said Alissa Johnson, a senior policy specialist at the National Conference of State Legislatures. “We do often see this kind of momentum with first-of-its-kind legislation.”

In 2003, about 25,000 organ transplants were performed in the United States and of those, almost 7,000 organs came from “living donors,” according to the United Network for Organ Sharing (UNOS), a national non-profit organization based in Richmond, Va.

Still, more than 86,000 people are waiting for an organ, UNOS said. About 16 people die every day because organs are unavailable, according the U.S. Health and Human Service’s official organ donation Web site.

“It seems so senseless that in a very modern, very cutting-edge society, people are still dying because there are not enough organs to go around. … That’s really sad,” Wieckert said.

It is illegal under federal law to buy or sell organs, but Wieckert said his legislation can help ease the financial burdens associated with donation by allowing a tax deduction for out-of-pocket, non-medical expenses such as travel to and from the doctor’s office and hospital, overnight lodging and lost wages.

Nicholson, who made about a dozen trips to medical facilities in Wisconsin and Minnesota for testing, surgery and follow-up visits and who missed six weeks of work, said he thinks the law will help encourage others to donate.

“I was the only one in the family who was an eligible match for (my brother), and I figured if it was me, … I’d want him to give me one,” Nicholson said. “So for me, it probably wouldn’t have mattered if the deduction was available or not, but it certainly helps because you miss some wages and have to take a lot of days off for tests.”

Nicholson works at a lumber company that provided short-term disability insurance to cover 80 percent of his lost wages, but he will claim about $4,000 on his state tax forms next year to recoup the additional lost pay and other expenses related to the transplant.

Since the law hasn’t been on the books for a full tax cycle, it’s unclear whether it actually will boost the number of living donors.

Eva Robelia, a spokeswoman for the Wisconsin Department of Revenue, said that no data are available on how many donors plan to take advantage of the tax break, but that the agency is working with the state’s Department of Health and Family Services to get word out to the public.

There is no federal income-tax deduction for organ donation, but legislation signed in April by President George Bush may give some fiscal relief to living donors. The Organ Donation and Recovery Improvement Act, which becomes effective Oct. 1, authorizes the federal government to give grants to states or non-profit organizations that oversee the retrieval of organs for transplant to help offset non-medical costs for living donors, said Shaun Hill, legislative advocacy director at the National Kidney Foundation.

“Wisconsin has pretty much been out there on the forefront in terms of looking for different ways, legislatively, to increase donation,” said Virginia McBride, who works on public education in the special programs bureau at the U.S. Division of Transplantation.

Over the years, states have tried a variety of ways to boost organ donation. For example, at least 10 states permit private-sector or state employees to take unpaid leave to donate bone marrow or an organ, according to NCSL. Those states are Delaware, Illinois, Louisiana, Maryland, Minnesota, New York, Oregon, South Carolina, Virginia and Wisconsin.

The federal government also permits employees of the executive branch to take seven days of paid leave (if accrued) for bone marrow donation or one month for donation of another organ, McBride said.

Dozens of states provide specialty license plates that generate additional revenue for state agencies or organ procurement organizations to support organ donation education campaigns, NCSL said.

About half of the states allow drivers to indicate on their license whether they would like to be a donor, and many have online organ donor registries. At least nine states have taken a further step of requiring that organ donation be raised in driver’s education classes.