Qualified Charitable Distributions

Contents

1. What the rule requires
2. Why the 2017 law made it matter
3. The hassles and the limits

The Omaha causes Brent O’Mara supports include the American Heart Association and the American Cancer Society, and for a retiree with a traditional IRA, a gift to an organization like either one can travel by a route the tax code opened within living memory. The timeline is short. In August 2006 a pension law let people aged 70 and a half or older send up to $100,000 a year straight from an IRA to charity. The provision was temporary, extended several times, and made permanent in 2015. In 2017 a new tax law nearly doubled the standard deduction, and the direct gift, once a curiosity, became the main way most retirees could still get a tax benefit from giving. The ceiling began to rise with inflation, reaching $111,000 for 2026, the same year new floors and caps on itemized charitable deductions made the route more attractive again.

What the rule requires

The Internal Revenue Service describes a qualified charitable distribution as a nontaxable distribution made directly by the trustee of an IRA to an organization eligible to receive deductible contributions, one of the few exceptions to the rule that traditional IRA withdrawals are taxed in the year received.¹ The owner must be at least 70 and a half on the day of the distribution, the amount counts toward any required minimum distribution, the donor must hold an acknowledgment from the charity, and the gift cannot exceed what would otherwise have been taxable.¹ It cannot come from an active SEP or savings incentive match plan.¹ The custodian reports it on Form 1099 R as an ordinary distribution with no code marking it as charitable, so the taxpayer enters the full amount on the IRA line of Form 1040, zero on the taxable line, and the letters QCD beside it.¹ Form 8606 is also required when the distribution came from a Roth IRA or when other withdrawals were taken from the same traditional IRA in the same year.¹

Figure

The rules in 2026

1. 01
   AgeThe IRA owner must be 70 and a half or older on the day of the distribution.
2. 02
   AmountUp to $111,000 a year per person, $222,000 for a married couple giving from separate IRAs, indexed for inflation.
3. 03
   SourceA traditional IRA, an inherited IRA or an inactive SEP or savings incentive match plan, never a 401(k) or other employer plan.
4. 04
   RecipientA 501(c)(3) charity eligible to receive deductible gifts, not a donor advised fund sponsor or a private foundation.
5. 05
   No benefit, no carryoverNothing may come back to the donor, and any amount over the limit cannot be carried to a later year.

Kiplinger’s 2026 guide adds the current numbers and the exclusions. The limit is $111,000 per person, $222,000 for a married couple provided each gives from a separate IRA, and it is indexed, so it will likely rise each year.² Eligible sources are a traditional IRA, an inherited IRA and an inactive SEP or savings incentive match plan; a 401(k), 403(b), deferred compensation or Thrift Savings Plan account cannot make one, though funds rolled into an IRA in a prior year can.² The recipient must be a 501(c)(3) eligible to receive deductible gifts, and two kinds of charity are excluded: donor advised fund sponsors and private foundations.² In an American College of Trust and Estate Counsel video, a fellow lists a third excluded category, supporting organizations, and explains the core benefit in one sentence: the owner does not take the distribution into income, it counts against the required minimum, and it goes directly to the charity.⁷ The donor may receive nothing in return, not a ticket or a meal, and any amount over the limit counts as income like any other withdrawal, with no carryover.²

Why the 2017 law made it matter

The route existed for a decade before most people needed it. The New York Times reported the origin in November 2006: the Pension Protection Act, signed on August 17 of that year, allowed people 70 and a half or older to give up to $100,000 each to charities directly from their IRAs, a change that was attracting interest among older clients of tax advisers.⁶ A private bank’s wealth adviser told the paper that the move made sense in almost every bracket for anyone whose goal was philanthropy rather than lifestyle, because the IRA is the most heavily taxed asset a person owns.⁶

Then the deduction most retirees relied on disappeared. AARP explained in 2019 that the 2017 law nearly doubled the standard deduction, cutting the share of filers who took a charitable deduction from one in five to an expected 8 percent, so that a retiree who kept giving simply stopped getting credit for it.³ The direct distribution preserved the benefit without itemizing: a retiree in the 22 percent bracket who sent a $5,000 required distribution to charity saved $1,100 in federal income tax, the same as if the gift had been deducted.³ A tax analyst told AARP that the provision, permanent since 2015, was now even more valuable for anyone who had lost the deduction.³ The Wall Street Journal reported the same shift from the planners’ side, with one describing client projections that saved a lot of money, and advised not to wait until late December.⁴ The Journal’s later report framed the years since in the same terms: millions of Americans stopped getting key tax breaks for giving once the overhaul nearly doubled the standard deduction, while a growing group of seniors could still reap remarkable benefits from donations if they put up with some hassles.⁵

Figure

What the 2017 law changed

filers who took a charitable deduction under the old law

1 in 5

expected to take it after 2017

8%

federal tax saved by a 22 percent bracket retiree who sends a $5,000 required distribution to charity

$1,100

annual ceiling at the time

$100,000

The second benefit is subtler than the first. Because the money never enters adjusted gross income, AARP noted, a lower figure can mean less of a retiree’s Social Security being taxed, lower Medicare premiums, or eligibility for credits and deductions that would otherwise phase out.³ Kiplinger made the same point for 2026, when the new bonus deduction for people over 65 depends on modified adjusted gross income, and when itemizers face a floor of half a percent of income and a 35 percent cap on the value of their deductions, neither of which touches a distribution that was never income at all.² The deduction those rules govern is explained in the charitable deduction; the accounts the distribution cannot feed are described in donor advised funds and private foundations.

The hassles and the limits

The Journal’s later headline called the distribution a tax break worth the hassles, and the hassles are real.⁵ The money must go from the custodian to the charity, or by a check made out to the charity that the owner forwards; a retiree who withdraws the cash and then donates it has made an ordinary taxable withdrawal and an ordinary gift.³ Because the custodian’s form shows a regular distribution, the taxpayer must mark it correctly, and a planner told AARP that even accountants get confused; the custodian does not verify that the charity qualifies, so the letter from the charity is the donor’s proof.³ Deducting the same gift as a charitable contribution on top of excluding it from income is double dipping and a mistake.³

Figure

A distribution beside a deductible gift

	Qualified charitable distribution	Ordinary deductible gift
Must the donor itemize	No	Yes, to get any benefit
Effect on adjusted gross income	Never enters it	Deducted after it is computed
Counts toward a required minimum distribution	Yes	No
Can also be deducted	No, that is double dipping	Yes, once
Reported by the custodian	As an ordinary distribution on Form 1099 R	Not reported

Kiplinger lists the cases in which the route is not the right one: a retiree who needs the IRA money for living expenses, since a distribution only lowers income there is income to spare; one whose required distributions come from a 401(k) rather than an IRA; and one who would rather deduct the gift, since the two cannot be combined.² State tax treatment varies, and the IRA custodian and the charity should both be asked in advance whether a gift will qualify, since the IRS search tool confirms an organization’s exemption but not every detail of its eligibility.² Whether the move saves anything depends on a person’s circumstances, so qualified professionals in tax law and financial planning should check the arithmetic before the custodian is instructed.

The echo is in the 2006 remark that the IRA is the most heavily taxed asset. It remains so: every dollar withdrawn is ordinary income to the owner, and, as the college’s fellows explain in their video on beneficiaries, to the heirs who inherit the account as well, while a charity that receives it pays nothing.⁷ A provision passed as a two year favor in a pension bill answered that arithmetic, and each change to the tax code since, the 2015 extension, the 2017 standard deduction, the 2026 floors, has made the answer more useful rather than less.