Qualified Charitable Distributions (QCDs): A Smarter, Tax-Efficient Way to Give in 2026
Written By: David F. Gremillion, J.D. LLM (Tax)Qualified Charitable Distributions (QCDs)
If you want to donate to charity but you are worried about taxes due to recent OBBBA tax law changes, a Qualified Charitable Distribution (QCD) can be one of the most tax-efficient ways to give moving forward.
For 2026, eligible IRA owners can donate up to $111,000 per person directly from an IRA to a qualified charity. Married couples who both qualify can contribute for a combined total of up to $222,000.
Why QCDs Are More Valuable in 2026
Recent changes under the One Big Beautiful Bill Act make traditional charitable giving less tax-efficient for many taxpayers:
Charitable deductions only provide a benefit to the extent they exceed 0.5% of your adjusted gross income (AGI).
For taxpayers in the top 37% bracket, deductions are effectively capped at a 35% benefit.
In practical terms, you may not receive the full tax benefit you expect from writing a check to charity, particularly if you are retired or have significant income.
A QCD works differently.
How a QCD Saves Taxes
A Qualified Charitable Distribution is not a tax deduction. It is an exclusion from income.
Instead of taking money out of your IRA, reporting it as income, and then claiming a charitable deduction, a QCD allows you to send the funds directly to the charity and exclude that amount from your taxable income entirely.
Because the income is never reported, it also does not increase your adjusted gross income (AGI). That distinction can affect multiple parts of your tax situation.
Who Qualifies for a QCD
To use a QCD:
You must be age 70½ or older.
The funds must go directly from your IRA to a qualified 501(c)(3) charity.
The annual limit is $111,000 per person in 2026.
QCDs are only available from IRAs. If your retirement funds are in a 401(k) or similar plan, those funds generally must be rolled into an IRA before using this strategy.
Key Benefits of a QCD
Satisfies your Required Minimum Distribution (RMD): If you are age 73 or older, a QCD counts toward your annual RMD.
Keeps your taxable income lower: Because the distribution is excluded from income, your AGI stays lower.
May reduce Medicare premiums: Medicare Part B and Part D premiums increase at certain income thresholds. Lower AGI can help avoid those increases.
May reduce taxation of Social Security benefits: A lower AGI can reduce the portion of benefits subject to tax.
Helps preserve other tax benefits: Many deductions, credits, and thresholds are tied to AGI. Keeping it lower can make a meaningful difference.
A Simple Example of How this Can Benefit You and a Beloved Charity
Assume you are required to take a $50,000 RMD and plan to donate $20,000 to charity.
Without a QCD: You report the full $50,000 as income and then attempt to claim a charitable deduction, which may be limited.
With a QCD: You send $20,000 directly from your IRA to the charity and report only $30,000 as income.
The result is a lower AGI and, in many cases, a better overall tax outcome.
Planning Considerations
QCDs tend to be especially useful if you:
Do not itemize deductions
Are already taking RMDs
Are near Medicare premium thresholds
Want to manage taxable income in retirement
The funds must go directly from the IRA custodian to the charity. If the distribution is made payable to you first, the tax benefits may be lost.
Final Thoughts
As charitable deduction rules become more restrictive in 2026, Qualified Charitable Distributions remain a practical and effective planning tool. They allow you to support causes you care about while potentially lowering your taxable income and avoiding unintended tax consequences.
If charitable giving is part of your overall tax or estate plan, consider discussing whether a QCD strategy makes sense for your situation before year-end.
