More than 103,223 men, women, and children are currently on the national transplant waiting list. Seventeen of them will die today. And another 17 will die tomorrow. The reason? There aren’t enough organ donors saying yes. A new tax credit in Michigan aims to change that.
Deceased Donors
When we think of organ donation, we tend to think about donations after death. That’s because some organs, like your heart, can’t be transplanted by a live donor. Last year, just over half (about 57%) of all organ transplants were from deceased donors.
Deceased donation is exactly what it sounds like—giving organs, corneas, or tissues at the time of the donor’s death. That can only happen after death has been declared by medical professionals who are not part of the donation and transplant process. You can signal that you’d like to be a donor in most states by registering through the Department of Motor Vehicles (there’s typically a heart or other signal on your driver’s license if you’ve done this). You can also register through the National Donate Life Registry on DonateLife.net or RegisterMe.org.
Live Donors
While most donations came from deceased donors, about four in ten were from live donors last year.
Live donors can donate organs and tissue, including segments of your liver, portions of your lung, pancreas, and intestine, as well as tissue like skin, bone (after knee and hip replacement surgeries), cells, blood, platelets, and bone marrow. You can also donate a kidney—the most commonly donated organ—and the most in demand. About 85% of people waiting for a transplant—nearly 90,000 patients—are waiting for a kidney.
In 2023, more than 6,900 transplants were made possible by live donors. To qualify, live donors should be healthy and at least 18 years of age (in some cases, you may need to be 21). Having access to resources can also be helpful—donations can be expensive. While donors typically don’t have to pay for costs—the organ recipient’s insurance will often cover it—the related costs, including travel, lodging, and lost wages from being out of work, may disincentivize potential donors.
State Tax Breaks
Now, states like Michigan are creating tax breaks in the hope that they spur donations. This month, Michigan Gov. Gretchen Whitmer signed House Bill 4361 into law, making live organ donors eligible for a one-time credit of up to $10,000 beginning in 2025. The credit is intended to reimburse live donors for related expenses.
In Michigan, the credit covers expenses such as child care, transportation, lodging, and lost wages. Donors can claim the credit in the tax year of the surgery or for the tax year before or after the procedure. It’s nonrefundable, which means that if the amount of the credit exceeds the taxpayer’s tax liability for the tax year, that portion of the credit that exceeds the tax liability will not be refunded.
“With the current shortage of kidneys available for those with kidney failure who need them, it is critical that we support people who want to step up and give the gift of life,” said LaVarne A. Burton, AKF President and CEO, about the new law. “Unfortunately, too many Americans are unable to donate an organ due to the out-of-pocket costs associated with donating, which is why legislation like HB 4361 is so important. We are grateful to Rep. Brabec for her efforts to pass this law to reduce barriers to organ donation, as it will ultimately help save Michigan lives.”
The state joins others that offer a tax incentive to donate organs, including Arkansas, Colorado, Connecticut, Georgia, Idaho, Iowa, Kansas, Louisiana, Maryland, Massachusetts, Minnesota, Mississippi, New Jersey, New Mexico, New York, North Dakota, Ohio, Oklahoma, Pennsylvania, Rhode Island, Utah, Vermont, Virginia, and Wisconsin—as well as the District of Columbia.
(Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming do not levy a state income tax on individuals, so a tax break would typically not be beneficial.)
The average tax deduction cap runs $10,000—since most Americans pay, on average, 8.9% percent of their income in state taxes, the potential tax savings top out at about $890.
Not all breaks benefit donors directly. In some states, like Pennsylvania, the tax incentive isn’t targeted specifically to the donor but to the donor’s employer. Employers may take a tax credit equal to the wages paid to employees on leave for organ donation and any temporary employees hired.
Federal Law
For federal income tax purposes, costs related to donations may be deductible as medical expenses for taxpayers who itemize. If you itemize, there’s still a hurdle to clear: medical expenses are subject to a “floor,” meaning you must hit a certain level before deducting expenses. Currently, you can only deduct unreimbursed medical expenses that exceed 7.5% of your adjusted gross income (AGI), found on line 11 of your 2024 Form 1040.
Remember—most taxpayers don’t itemize their deductions, they claim the standard deduction. For 2025, the standard deduction amounts will be $15,000 for individuals and married couples filing separately, and $30,000 for married couples filing jointly (heads of household can claim $22,500).
One option to help defray expenses if you can’t benefit from the tax break? Some organizations, like the National Living Donor Assistance Center, may offer financial assistance to live donors to help pay expenses.
The federal government also has programs to assist. Those reimbursement rules are not found in the tax code, but in Title 42 (Title 42 focuses on public health, including Medicare and Medicaid). A relatively new rule expanded the scope of qualified reimbursable expenses for living organ donors to include travel, lodging, meals, and subsistence expenses such as lost wages, child care, and elder care expenses. No reimbursement is allowed if the donor can receive funds from any state compensation program, an insurance policy, any federal or state health benefits program, an entity that provides health services on a prepaid basis, or the organ recipient.
There are also benefits for some employees at the federal level. Specifically, federal employees are entitled to 30 days paid leave to donate organs and seven days to donate bone marrow. Some states also have medical leave laws that apply to live organ donation.
While donations are encouraged, selling your organs isn’t an option. As part of The National Organ Transplant Act, it’s illegal to “acquire, receive or otherwise transfer any human organ for valuable consideration.”(Of course, just because something is illegal doesn’t make it non-taxable. Income is still income and income from illicit activities is reportable and taxable—just ask Al Capone.)
Your best bet? Talk to a professional. If you have questions about becoming a live donor, and you know the person you’d like to help, ask them for the contact information for their transplant program. If you want to donate to help someone you do not know, contact a transplant hospital (you can find a list of transplant hospitals here).
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