If you are 70½ or older and give to charity, a Qualified Charitable Distribution, or QCD, can be a tax-efficient way to do it.
What Is a QCD?
A QCD is a direct transfer from your IRA to a qualified 501(c)(3) charity. The check goes from your custodian straight to the charity. You never touch the money. For 2026, you can give up to $111,000 per person this way, or $222,000 for a married couple where both spouses have IRAs and are each 70½ or older. These limits are indexed for inflation and change annually.
Why It Matters More Than It Might Seem
When you take a regular distribution from a traditional IRA, that money counts as taxable income. If you are subject to Required Minimum Distributions, which begin at age 73, those withdrawals add to your Adjusted Gross Income whether you want the money or not. Higher AGI can push you into a higher tax bracket, cause more of your Social Security to be taxable, trigger higher Medicare premiums through IRMAA, and phase out other deductions and credits.
A QCD can help mitigate these effects because the distribution is excluded from income. For taxpayers who take the standard deduction, which describes most retirees, a QCD may provide a tax benefit that would not otherwise be available, because charitable deductions generally require itemizing.
Key takeaway: A QCD is excluded from income entirely, not treated as a deduction. That distinction matters especially for retirees who take the standard deduction and would otherwise receive no tax benefit from charitable giving.
How Recent Tax Law Changes Affect QCDs
Recent changes under the One Big Beautiful Bill Act may make QCDs relatively more attractive for some taxpayers. Beginning in 2026, the law introduced new limits on charitable deductions for itemizers, including a 0.5% of AGI floor before donations become deductible, and a cap on the tax benefit for those in the top bracket. Because a QCD is an exclusion from income rather than a deduction, it is not subject to these rules.
Important Details to Keep in Mind
- The transfer must go directly from the IRA custodian to the charity. If the money passes through your hands first, it does not qualify.
- QCDs count toward your RMD for the year in which they are made. Timing matters: if you take your RMD in January and try to do a QCD in February, you cannot retroactively apply it.
- Donor-advised funds, private foundations, and supporting organizations do not qualify as QCD recipients, with one narrow exception involving certain split-interest entities.
- QCDs are only available from IRAs, not from workplace retirement plans such as 401(k)s.
A Less Commonly Known Rule
For individuals who continue making deductible IRA contributions after age 70½, the amount eligible for tax-free QCD treatment is reduced by the cumulative amount of those post-70½ deductible contributions. Still-working retirees who are both contributing to and giving from an IRA should pay particular attention to this interaction.
What About State Taxes?
State tax treatment of QCDs varies. Most states follow federal treatment, but not all, so the state-level benefit depends on where you live.
The tax rules governing QCDs are complex and the benefits depend on individual circumstances. Consult a qualified tax advisor before making a QCD.
Ready to Put Your IRA to Work?
If you are charitably inclined and meet the age requirement, a QCD may be one of the most tax-efficient moves available to you. We can help you determine whether it fits your situation and coordinate the details with your tax advisor.