Qualified Charitable Distribution (QCD)
A direct transfer from an IRA to a qualified charity by a taxpayer age 70 and a half or older, satisfying the RMD without inclusion in taxable income.
Detailed Explanation
QCDs are limited to $108,000 per taxpayer (2025, indexed). The transfer goes directly from the IRA custodian to the charity (a 501(c)(3) public charity, not a donor-advised fund or supporting organization in most cases). The QCD satisfies the RMD requirement and reduces AGI rather than producing an itemized deduction, which is more valuable than a Schedule A deduction for most retirees. SECURE 2.0 added a one-time $54,000 QCD option to fund a charitable gift annuity or charitable remainder trust.
Key Points
- Available to IRA owners age 70 and a half or older; limited to $108,000 per taxpayer for 2025 (indexed).
- Funds must transfer directly from the IRA custodian to a qualifying public charity.
- Counts toward the RMD and is excluded from income, lowering AGI (better than an itemized deduction for most).
- Donor-advised funds and most supporting organizations are not eligible recipients.
- SECURE 2.0 added a one-time election (about $54,000) to fund a charitable gift annuity or remainder trust.
Practical Example
A 75-year-old has a $40,000 RMD and normally gives $20,000 to her church. She directs $20,000 from her IRA to the church as a QCD. That $20,000 satisfies part of her RMD and is excluded from income, so she still takes the standard deduction while lowering AGI, which can also reduce Medicare IRMAA surcharges and Social Security taxation.
Related TS CPA Service
Year-round, proactive tax planning that puts more money back in your pocket, not the IRS's.
Learn about Tax Planning & StrategyRelated Terms
Required Minimum Distribution (RMD)
The annual minimum amount that must be withdrawn from most retirement accounts after a specified age, taxed as ordinary income.
Itemized Deductions
Specific deductions claimed on Schedule A in lieu of the standard deduction, including state and local tax, mortgage interest, charitable contributions, and medical expenses.
Adjusted Gross Income (AGI)
Adjusted Gross Income is your total gross income reduced by specific above-the-line deductions, used as the starting point for calculating your federal taxable income.
Have a Question About Qualified Charitable Distribution (QCD)?
Get a free, no-obligation answer from a licensed CPA. We respond the same day.
Free Consultation