The Division of Local Government Services has issued Local Finance Notice 2024-11 (LFN 2024-11), which provides Internal Revenue Services (IRS) guidance for volunteer firefighters and EMS. Federal income tax laws apply to firefighters and EMS, including volunteer firefighters and EMS. Whether or not the firefighter or EMS is a volunteer, if the work the volunteer does is subject to the will and control of the municipality paying the compensation, under the common-law rules, the volunteer is considered an employee for federal tax purposes. All amounts that volunteer firefighters and EMS receive as compensation may be subject to Federal income tax unless a statutory or regulatory exclusion applies.
The Volunteer Responder Incentive Protection Act (VRIPA) of 2020 amended 26 U.S.C. §139B to exclude from federal income tax payments up to $50 per month, with a maximum of $600 annually, for volunteer firefighters and EMS. Any amount exceeding this limit is taxable. For example, if a volunteer receives $700 in a year, $600 is tax-exempt, and the remaining $100 is taxable.
The League recommends reviewing LFN 2024-11 with your CFO and Town Administrator.
Contact: Andrew LaFevre, Legislative Analyst, alafevre@njlm.org, 609-695-3481, x116.