Qualified Charitable Contributions to Help Reduce Taxes on RMDs
A qualified charitable distribution (QCD) can be a useful strategy if you’re interested in supporting causes you care about while managing your tax situation in retirement. For those who qualify, it offers a way to direct IRA distributions to charity and potentially reduce taxable income. Let’s examine the situations where a QCD may be appropriate and how it can work.
QCD eligibility begins at age 70.5, even though required minimum distributions (RMDs) may begin later under current law.
When Should I Use a Qualified Charitable Distribution from My IRA?
If you are charitably inclined, have an IRA, and are age 70.5 or older, a qualified charitable distribution (QCD) strategy may be worth considering. A QCD can help satisfy your required minimum distribution (RMD) and may, in certain situations, potentially lower your tax bill. Here’s how it may work:
Consider the hypothetical example of Elizabeth, a 72-year-old with an IRA RMD of $15,000 this year. Instead of taking the distribution herself, she sends the $15,000 directly to a charity. This helps satisfy her RMD, and the amount is generally not included in her gross income if all QCD requirements are satisfied.
Excluding the RMD from Gross Income May Have Potential Benefits:
• Potentially lowers income tax
• If on Medicare, the QCD may help keep modified adjusted gross income below thresholds that can increase monthly premiums
• Reduces income that may be subject to the net investment income tax
• May decrease the amount of Social Security benefits subject to income tax
• Helps maintain eligibility for certain income tax deductions and credits
These outcomes depend on individual tax circumstances, income levels, and filing status and may not apply in all cases.
QCD Rules and Requirements
• You must be at least 70.5 years old at the time the distribution from the IRA to charity is processed
• QCDs must be completed by December 31 of the applicable tax year
• IRA Distribution checks cannot be made payable to you; checks must be payable to a charity
• The maximum annual amount that can qualify for the QCD is $111,000 per person in 2026
• Donor-Advised Funds and private foundations are not eligible to receive QCDs
• QCDs cannot be made from employer-sponsored retirement plans such as 401(k)s
You do not need to direct your entire RMD to charity to take advantage of a QCD. For example, if your RMD is $15,000, you could send $1,000 to charity and pay taxes only on the remaining $14,000. You can also use the QCD for more than your RMD if you wish, but none of the additional amount may count toward satisfying RMDs in future years.
The QCD is not new but does have new implications following changes with the Tax Cuts and Jobs Act (TCJA) which increased the standard deduction, with amounts adjusted annually for inflation, and eliminated several deductions. In 2025, the standard deduction is $15,750 for single filers and $31,500 for married filing jointly. As a result, many filers who previously itemized now claim the higher standard deduction and may no longer itemize charitable donations. Those age 70.5 or older may still receive a tax break through using a QCD for charitable giving.
A QCD is not a one-size-fits-all solution for tax planning and charitable giving. Some people may donate appreciated securities or use a bunching strategy to alternate between the standard deduction and itemized deductions. It is important to consult with your financial advisor and tax professional regarding your unique situation.
This is intended for informational purposes only. You should not assume that any discussion or information contained in this document serves as the receipt of, or as a substitute for, personalized investment or tax advice from Savant. Please consult your investment or tax professional regarding your unique situation.