Qualified Charitable Distributions: Giving From Your IRA Without Adding to Your Income

Key takeaways

A QCD is available from age 70½, counts toward required minimum distributions, and is excluded from income entirely rather than deducted.
The annual limit is $111,000 per person in 2026, indexed each year. Married couples each have their own limit from their own IRAs.
Because it reduces AGI, a QCD also lowers Medicare IRMAA exposure, Social Security taxation, and the 3.8% surtax.
The check must go directly from the custodian to the charity; a withdrawal followed by a gift doesn't qualify.

For retirees who give to charity, the qualified charitable distribution is the most efficient giving tool in the tax code. It's also underused, mostly because it's slightly awkward to execute. It replaces a deduction most retirees no longer get with an exclusion from income that everyone gets, and it turns a required distribution from a tax problem into a gift.

What a QCD is

Starting at age 70½, an IRA owner can direct the custodian to send money straight from the IRA to a qualified public charity. The amount never enters the owner's income. It isn't a deduction; it's simply not there. And it counts toward the year's required minimum distribution once RMDs begin (at 73, or 75 for those born in 1960 or later), so the required withdrawal can be satisfied without any of it being taxed.

The annual limit is per person and indexed for inflation. It was $105,000 in 2024, $108,000 in 2025, and $111,000 in 2026. Married couples each have their own limit from their own IRAs. A one-time election of up to $54,000 (2025) can fund a charitable gift annuity or charitable remainder trust from an IRA, a narrower provision added in 2023.

Why exclusion beats deduction

Say a retired couple gives $15,000 a year to their church and a local hospital foundation. They take the standard deduction, $32,200 in 2026 for joint filers, because their itemized deductions don't get past it. Their charitable gifts, paid from checking, produce no tax benefit at all. None.

If instead they send the $15,000 directly from an IRA as a QCD, the $15,000 counts toward their RMD and is excluded from income. At a 22% bracket that's $3,300 of federal tax saved on a gift they were making anyway. Starting in 2026, non-itemizers can deduct up to $2,000 (joint) of cash gifts, and itemizers face a new 0.5% of AGI floor; the QCD sidesteps both.

For higher-income retirees the advantage is bigger, because a QCD reduces adjusted gross income rather than taxable income, and AGI drives several other calculations.

Medicare premiums. The IRMAA tiers are set by modified AGI two years earlier. A QCD that keeps a couple under $218,000 (the 2026 first tier) saves them roughly $2,300 a year in premiums on top of the income tax.
Social Security taxation. The share of Social Security that's taxed depends on provisional income, which includes AGI. A lower AGI can drop the taxable portion from 85% toward 50% or lower.
The 3.8% net investment income tax. It applies above $250,000 of AGI for joint filers; a QCD can keep investment income below the threshold.
Medical deductions. The 7.5% of AGI floor on medical expenses falls as AGI falls.

The rules that matter

Age. 70½ exactly, on the date of the distribution. Turning 70 in the year isn't enough.

Direct transfer. The custodian must pay the charity directly, by check made out to the charity (which can be mailed to you to deliver) or by electronic transfer. If the money touches your account first, it's a normal taxable withdrawal followed by an ordinary gift.

Eligible accounts. Traditional IRAs, inherited IRAs (if the beneficiary is 70½), and inactive SEP and SIMPLE IRAs. Not 401(k)s or other employer plans; those have to be rolled to an IRA first. Roth IRAs are technically eligible, but there's no reason to use them, since Roth withdrawals are already tax-free.

Eligible charities. Public charities under Section 170(b)(1)(A). Not donor-advised funds, private foundations, or supporting organizations. And not a gift that gets you something back, like a gala ticket or preferred seating.

No deductible IRA contributions after 70½. If you make deductible traditional IRA contributions after 70½, the QCD exclusion is reduced by the cumulative amount of those contributions. Retirees still working and contributing should use a Roth IRA instead.

Documentation. Get a written acknowledgment from the charity, as with any gift. The custodian's 1099-R will show the full distribution as if it were taxable; the exclusion is reported on your return, and whoever prepares it needs to know which distributions were QCDs. This is where QCDs go wrong most often. It's on the list we send preparers every January.

Sequencing within the year

The QCD should be the first money out of the IRA in any year with an RMD. The first dollars withdrawn from an IRA in a year are deemed to satisfy the RMD, so a taxable withdrawal in January followed by a QCD in November doesn't retroactively turn the January withdrawal into a QCD. Make the gifts early, or hold the RMD until the gifts are done.

QCDs can be made before RMDs begin, from 70½ to 72 (or 74), and they still shrink the IRA balance that future RMDs are calculated on. For a charitably inclined retiree with a large IRA, starting at 70½ is worth it.

QCDs and the estate plan

The same logic that makes the IRA the right account to give from during life makes it the right asset to leave to charity at death. A charity pays no income tax on an inherited IRA, while children pay ordinary income tax on every dollar under the 10-year rule. For families that intend to leave something to charity, naming the charity as an IRA beneficiary and leaving taxable and Roth assets to children is the efficient arrangement. Our guide to beneficiary designations covers the mechanics.

How we use it

Every client over 70½ who gives to charity has a QCD plan: the annual amount, the charities, the timing relative to the RMD, and the custodian paperwork, all done early in the year so the RMD is satisfied before any taxable withdrawal. The exclusion gets documented for the preparer. It's a small piece of tax planning that reliably saves thousands a year for the right households.

Frequently asked questions

Can I make a QCD from my 401(k)?

No. Only IRAs qualify. Rolling the 401(k) into an IRA, which is often sensible at retirement anyway, makes the balance eligible.

Can a QCD exceed my RMD?

Yes, up to the annual limit. The excess simply reduces the IRA balance and is excluded from income. It doesn't carry forward to satisfy next year's RMD.

Does a QCD work with a donor-advised fund?

No. Donor-advised funds are excluded. For gifts to a donor-advised fund, the better asset is appreciated stock from a taxable account.

What if my custodian sends the check to me?

That's allowed if the check is payable to the charity. You deliver it. A check payable to you, deposited and then gifted, is a taxable withdrawal.

Joseph G. Valerio, CFP®, EAFounder and Lead Advisor at Valerio Wealth Management, a fee-only, fiduciary virtual family office in Miami, Florida. One advisor, credentialed in both financial planning and federal tax. About Joseph

This article is general education, not individualized advice, and it is not tax, legal, or accounting advice. Figures reflect federal law for the year stated and can change. Valerio Wealth Management does not prepare or file tax returns. Speak with a qualified professional about your own situation before acting.