Qualified Charitable Distributions (QCDs) From Your IRA

A Qualified Charitable Distribution moves money directly from your IRA to a qualified charity, satisfies your required minimum distribution, and never appears in your taxable income. For charitably inclined retirees age 70½ or older, it is the single most efficient way to give.

The basic rule

Under IRC §408(d)(8), an IRA owner who is at least age 70½ can direct the IRA custodian to send up to $108,000 (2025 limit, indexed under SECURE 2.0 §307) per year directly to one or more qualified §501(c)(3) public charities. The distribution counts toward the required minimum distribution but is excluded from gross income — and therefore from AGI, MAGI, and every threshold those numbers drive.

Why the age threshold differs from the RMD age

QCDs are available starting at age 70½ even though RMDs do not begin until age 73 or 75. This creates a planning window of two to four years during which you can use the QCD to give charitably without yet being required to take an RMD. After RMDs start, the QCD continues to satisfy them.

What counts as a qualified charity

• Public charities described in IRC §170(b)(1)(A) — churches, schools, hospitals, most operating charities.
• SECURE 2.0 §307 added a one-time exception allowing up to $54,000 (2025 inflation-adjusted figure) of the annual QCD to fund a Charitable Gift Annuity or Charitable Remainder Trust — but only once in a lifetime.

Donor-advised funds, private foundations, and supporting organizations are not eligible. The check must be payable to the charity itself.

Why it beats the itemized deduction

The QCD is an above-the-line exclusion. By contrast, a regular charitable contribution deduction under IRC §170 only helps if you itemize — and the 2025 standard deduction ($30,000 MFJ, $15,000 single) means most retirees no longer itemize at all. Even when they do, the deduction reduces taxable income but not AGI. Lower AGI matters separately because:

• Up to 85% of Social Security becomes taxable at AGI thresholds ($25K/$34K single, $32K/$44K MFJ under IRC §86).
• Medicare Part B and Part D IRMAA surcharges are MAGI-driven, with a two-year lookback.
• The 3.8% Net Investment Income Tax under IRC §1411 applies above $200K single / $250K MFJ.
• The §199A qualified business income deduction phases out at AGI thresholds.

A QCD reduces AGI for every one of those tests. An itemized contribution does not.

Worked example

A 75-year-old widow has a $40,000 RMD she does not need for living expenses. She gives $20,000 to her church each year. Without a QCD she takes the full $40,000 RMD (added to AGI), then itemizes a $20,000 charitable deduction — but only if her total itemized deductions exceed the $17,550 standard deduction for a 75-year-old single filer in 2025. Net AGI: $40,000 higher; possible deduction $2,450.

With a QCD she directs $20,000 of the $40,000 RMD to her church. Only $20,000 hits her AGI. The other $20,000 is gone for tax purposes entirely. The QCD wins by between $5,000 and $7,000 of federal tax, before counting reduced IRMAA in the year following.

Common mistakes

• Withdrawing first, donating second. The distribution must go directly from the IRA custodian to the charity. A check made out to you defeats the exclusion entirely.
• Using a 401(k). QCDs are IRA-only. A 401(k) participant who wants to use the QCD must roll the 401(k) to an IRA first.
• Forgetting to tell your CPA. Most 1099-R forms do not flag a QCD. The IRA's gross distribution shows on Form 1040 Line 4a; write "QCD" next to Line 4b with the taxable amount reduced. Without that notation, the IRS taxes the whole thing.
• Exceeding the cap. The 2025 cap is $108,000 per IRA owner. A married couple with two separate IRAs can each give $108,000. Amounts above the cap are taxable.

Sources

• Internal Revenue Code §408(d)(8), Qualified Charitable Distributions (Cornell LII): law.cornell.edu/uscode/text/26/408
• SECURE 2.0 Act §307, indexing of QCD cap and one-time CRT/CGA option. Pub. L. 117-328: congress.gov/bill/117th-congress/house-bill/2617
• IRS Publication 590-B, Distributions from IRAs, chapter on QCDs: irs.gov/forms-pubs/about-publication-590-b
• IRS Notice 2007-7, QCD operational guidance: irs.gov/pub/irs-drop/n-07-07.pdf
• Internal Revenue Code §170, charitable contributions (Cornell LII): law.cornell.edu/uscode/text/26/170

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