If you’re retired and sitting on a sizable balance in a traditional IRA, you’re likely already familiar with the concept of required minimum distributions (RMDs). Once you hit age 73, the IRS mandates you start withdrawing from your tax-deferred accounts — and those withdrawals count as taxable income.1 The larger your account balance, the higher your RMD and, possibly, the higher your tax bracket.
Enter the qualified charitable distribution (QCD), a powerful, often-overlooked strategy that can reduce your tax burden while supporting the causes you care about.
What’s a QCD, and Why Should You Care?
QCD allows you to donate directly from your IRA to a qualified charity, bypassing your taxable income altogether. While you don’t get a charitable deduction for a gift made this way, the distribution is excluded from your income so the tax benefit still stands. In fact, depending on your income level and filing status, a QCD can be more beneficial than simply donating cash or appreciated assets.
Since the QCD amount never hits your taxable income, it can help:
- Reduce the total amount of tax you owe
- Avoid phaseouts of deductions or credits tied to income
- Lower the taxation of your Social Security benefits
- Potentially decrease your Medicare premiums
And because QCDs are excluded from income rather than itemized, you can still take the standard deduction—perfect if you no longer have enough deductions to itemize.
Rules of the Road
To qualify:
- You must be at least 70½ at the time of the donation.
- The funds must go directly from your IRA custodian to the qualified charity.
- Each spouse must make their own QCD up to the annual limit from their own IRA.
- The donation must be to a qualified public charity (not a donor-advised fund or private foundation), and you can’t receive anything in return — not even a tote bag!
For 2025, the QCD limit is $108,000 per person, or $216,000 for married couples.
There’s also a new option to use up to $54,000 of that limit as a one-time donation to a charitable remainder trust or charitable gift annuity.
A Note on New Reporting Rules
As of 2025, there’s an important change you should know about: Custodians must now report QCDs using a new code —“Y”— on Form 1099-R. In the past, it was up to you to inform the IRS that your distribution qualified as a QCD. This update should simplify your tax filing process and reduce the risk of reporting errors.
Is a QCD Right for You?
If you’re taking RMDs and are interested in philanthropy, a QCD could offer a smart, tax-efficient way to give. Be sure to speak with your financial advisor to evaluate your options and make sure your giving strategy aligns with your overall financial plan.
*For those born in 1965 or later, the RMD age is 75.
1For those born in 1965 or later, the RMD age is 75.
The opinions and analyses expressed in the article are based on Curi Capital, LLC's research and professional experience. The information and data in this article do not constitute legal, tax, accounting, investment or other professional advice. Investors should consult with their trusted professionals prior to taking any action.
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