If you're 70½ or older with money in a traditional IRA, there's a tax trick sitting right in front of you that a surprising number of retirees never use.
It's called a qualified charitable distribution, or QCD, and it lets you send money straight from your IRA to a charity without it ever counting as taxable income.
Once you hit 70½, you can direct up to $108,000 per year (the 2025 limit, indexed annually) from your IRA directly to one or more qualified charities.
The money goes from your custodian to the charity.
Because it never lands in your checking account, it never shows up as income on your tax return.
That last part is where the real money hides.
A lot of retirees assume giving to charity is basically the same whether you write a check or use a QCD.
If you take a normal IRA withdrawal and then donate the cash, that withdrawal still counts as income.
It can bump you into a higher bracket, increase the taxable portion of your Social Security, raise your Medicare Part B and Part D premiums two years later, and chip away at deductions you were counting on.
The distribution satisfies your required minimum distribution if you have one, and it never enters your adjusted gross income.
For retirees who don't itemize — which is most of them since the standard deduction got so large — a QCD is often the only way a charitable gift actually lowers your tax bill.
You must be 70½ or older on the date of the transfer.
The charity has to be a qualified 501(c)(3), and it can't be a private foundation or a donor-advised fund.
The transfer has to go directly from the IRA custodian to the charity.
If a check is made out to you, even if you forward it, the IRS generally treats it as a taxable withdrawal.
One more wrinkle: starting in 2024, you can make a one-time QCD of up to $53,000 to a charitable gift annuity or a charitable remainder trust.
That's a newer option, and it's worth asking a tax professional about if it fits your situation.
To set one up, call your IRA custodian and ask for their QCD form.
You'll need the charity's legal name, address, and tax ID number.
The custodian will report the distribution on Form 1099-R, and you or your tax preparer will note on your return that it was a QCD.
QCDs count for the year the money leaves the IRA, so if you want it to count for 2025, the transfer has to be completed by December 31.
Custodians get swamped in December, so starting in November is smarter than starting on the 20th.
It's a plain piece of the tax code that's been around since 2006, and it quietly saves retirees real money every year.
If you're charitably inclined and sitting on a traditional IRA, it's worth a phone call to your advisor before the year runs out.
The takeaway: giving from your IRA isn't just generous, it can be the most tax-efficient dollar you donate all year.
Final Thoughts
Run the numbers with a professional, but don't let another December slip by without at least asking the question.