If you write a check to your church or a favorite charity each year, and you’re 70½ or older, there’s a good chance you’re paying tax on that money before it ever reaches them. The gift comes out of an IRA withdrawal that’s already counted as income, or out of savings you paid tax on years ago. Either way, the IRS gets a cut first.
There’s a way around that. It’s called a Qualified Charitable Distribution, and it lets the money move straight from your IRA to the charity — no income tax attached, no detour through your tax return at all.
When Giving the "Normal" Way Costs You Twice
Take money out of a traditional IRA, and the IRS counts it as taxable income the moment it lands in your account — regardless of what you plan to do with it afterward. If you then donate that money and itemize the gift, 2026 rules make the deduction worth less than it used to be, in two separate ways.
First, there’s a floor: charitable contributions now have to clear 0.5% of adjusted gross income before any of it is deductible. So a retiree with $250,000 in AGI who donates $10,000 loses the first $1,250 of that gift to the floor — only $8,750 actually counts as a deduction.
Second, there’s a cap on the deduction’s value: for donors in the top tax bracket, the deduction is now capped at a 35% benefit rate instead of 37%, so even the part that clears the floor saves slightly less per dollar than it used to.
Either way, you’re still taxed on the full amount you withdrew — the floor and the cap just mean less of your gift offsets that tax bill than it would have before 2026.
How a QCD Skips That Math Entirely
A Qualified Charitable Distribution works differently because of how it’s classified. Instead of coming to you first and then going to the charity, the money moves directly from your IRA to the charity — you never take receipt of it. Because it’s treated as an exclusion rather than a deduction, the 0.5% floor doesn’t touch it, the deduction cap doesn’t touch it, and you don’t need to itemize to benefit.
That last point matters even if you already take the standard deduction. A QCD doesn’t require itemizing to work — which means it stays just as effective after the 2026 rule changes tightened the traditional deduction.
What the Rules Actually Require
A QCD isn’t complicated, but it has to be done a specific way to count. The basics for 2026:
- Age. You must be at least 70½ years old on the date of the transfer — that’s the QCD eligibility age, separate from the RMD start age of 73.
- Eligible accounts. Traditional, Rollover, and Inherited IRAs qualify. 401(k)s and other employer plans don’t, unless rolled into an IRA first.
- How the money moves. The distribution must go directly from your IRA to an eligible 501(c)(3) as a trustee-to-trustee transfer — the funds never pass through your hands. Donor-advised funds and private foundations don’t qualify.
- Annual limit. Up to $111,000 per person for 2026, or $222,000 for a married couple where each spouse has an eligible IRA — indexed for inflation each year.
- RMD offset. If you’re 73 or older and already required to take RMDs, a QCD counts toward that year’s requirement — so you can satisfy your RMD and make the gift in the same move.
- Timing. The transfer has to be completed by December 31 to count for that tax year.
Why This Matters More Starting in 2026
The 2026 tax changes make this an especially good year to reconsider how you give. The itemized deduction rules for charitable gifts got measurably worse this year — the floor and the cap covered above — right as the standard deduction got larger, which means fewer people benefit from itemizing at all. A QCD isn’t affected by either change, since it was never a deduction to begin with.
There’s a second benefit worth mentioning, framed carefully: because a QCD keeps the money out of your adjusted gross income entirely, it may help you stay under income thresholds tied to things like Medicare premium surcharges or how much of your Social Security benefit gets taxed. This isn’t guaranteed — it depends on your full financial picture — but for the right household, it’s one more reason a QCD can be worth more than the deduction it replaces.
This article is educational and general in nature. Everyone’s tax situation is different, and your own circumstances should be reviewed with a qualified professional before you act on any of the strategies discussed here.
Is a QCD Right for You?
If you’re already giving to your church or a cause you care about, and you’re 70½ or older, this is worth a conversation before the December 31 deadline — especially this year, with the new limits on itemized giving in place. A QCD doesn’t ask you to change how much you give. It just changes how that gift touches your tax return.
If you’d like to talk through whether this fits your situation, we’re happy to set up a Fit Meeting and walk through the numbers together.
Disclosures
The opinions expressed herein are not meant to provide specific investment advice or serve as a prediction for future stock market performance. We recommend everyone consult with a financial professional for advice related to their own, individual financial situation or plan. Paul Axberg is an investment advisor representative of, and securities and advisory services are offered through USA Financial Securities, Member FINRA/SIPC. A registered investment advisor located at 6020 E. Fulton St., Ada, MI 49301. Axberg Wealth Management is not affiliated with USA Financial Securities.