If you're 70½ or older with a traditional IRA, the way you give to charity could be costing you more than you think.
A growing number of financial planners and nonprofits are steering retirees toward something called a qualified charitable distribution, or QCD — and it's one of the few tax breaks that survived the recent tax law changes intact.
Once you hit 70½, you can send money directly from your IRA to a qualified charity.
The transfer counts toward your required minimum distribution, but it never shows up as taxable income on your return.
In 2025, you can move up to $108,000 per person this way, and the limit adjusts for inflation each year.
Most retirees who itemize deductions have been taking the standard deduction since the 2017 tax overhaul raised it.
That means their charitable gifts no longer produce a write-off at all.
A QCD sidesteps the problem entirely, because it works whether or not you itemize.
The mechanics are stricter than a normal donation, though.
The money has to go straight from your IRA custodian to the charity.
If you withdraw it yourself first and write a check, the IRS treats it as a taxable distribution, and you lose the benefit.
You also need to be at least 70½ on the day of the transfer, and the charity must be a legitimate 501(c)(3) — not a donor-advised fund or a private foundation.
One detail trips people up every year: the paperwork.
Your custodian reports the distribution on Form 1099-R, and it may look taxable at first glance.
You or your tax preparer have to report it correctly on your return so it's excluded from income.
Starting in 2023, you can make a one-time QCD of up to $54,000 (indexed) to a split-interest entity like a charitable remainder trust or a charitable gift annuity.
It's a narrow option, but for retirees who want income back from the gift, it can matter.
For married couples, each spouse can use their own IRA and their own limit, which effectively doubles the ceiling.
And because the money leaves your IRA before it's taxed, it also reduces the balance that future required distributions are calculated on — a small compounding benefit that adds up over a long retirement.
QCDs must be completed by December 31 of the tax year you want them counted.
Custodians get swamped in December, so planners recommend starting the process in November at the latest.
Some charities also take weeks to process and acknowledge gifts, which you'll want documented for your records.
If you've been giving the same amount every year out of your checking account, it's worth a fifteen-minute call to your IRA custodian to see whether routing it through a QCD would leave you with a smaller tax bill.
For a lot of retirees in their seventies and eighties, the answer is yes — and the switch costs nothing but a form.
The QCD isn't flashy, and it won't make headlines like a hot stock or a new deduction.
Final Thoughts
But for the millions of Americans who give generously after retirement, it may be the most underused money-saving move left in the tax code.