The rule of thumb when mulching is to mulch out, not up. Don't place mulch up against the trunk; keep the mulch 3 to 4 inches away from the tree's trunk and root flare. Mulching the entire area within the tree's drip line (out to the far edge of the canopy) is the most beneficial. This reduces competition from other plants and keeps mechanical equipment such as mowers and line trimmers from damaging the tree's bark.
Mulching Mistakes Volcano Mulch
The biggest mistake homeowners and landscape professionals make is the over-application of mulch, especially mounding mulch on top of the tree's trunk and root flare. This is often referred to as creating "mulch volcanoes". These are detrimental to tree health for two reasons:
Mulch rots the bark, and exposes the vascular system to decay. The bark on roots is adapted to being underground; the bark on tree trunks tends to rot if it is buried in soil.
Trees try to generate new roots in the new, higher soil level. Many of these roots grow quickly and sideways, to stay within the mulch; sideways roots often girdle and kill the trunk or supporting roots.
Killed by volcano mulch
A mulch volcano is detrimental to tree health
Example of a girdling root caused by too much mulch
Mulching Too Deeply
Another mistake is mulching too deeply. Roots need both air and water to survive. If the mulch layer is too deep, the amount of oxygen and water absorbed into the soil, and eventually the plants, may be severely decreased. Maintaining a mulched layer of 2 to 4 inches is recommended.