Written by You’re Already Going to Give. Let’s Make It Tax-Free
Here’s one of my favorite strategies, because it requires almost no change to what you’re already doing. If you’re a retiree over 70½ who donates regularly to a church, mosque, synagogue, food bank, or any qualified nonprofit. The Qualified Charitable Distribution (QCD) could eliminate the taxes on those dollars entirely.
Most people have never heard of it. Once they understand it, they wonder why nobody told them sooner.
The Problem With the Traditional Approach
Here’s how most charitable retirees handle their giving:
- Take their Required Minimum Distribution (RMD) from their IRA
- The money hits their bank account and is counted as taxable income
- Write a check to their charity of choice
The hope is that the charitable contribution can be written off as a deduction. But here’s the catch: since 2018, the standard deduction has been high enough that the majority of Americans no longer itemize their deductions. If you’re taking the standard deduction, that charitable contribution doesn’t reduce your taxes one bit.
You paid full ordinary income tax on the RMD, and then the donation provided no tax benefit. Uncle Sam got his cut regardless.
The QCD Fixes This Completely
A Qualified Charitable Distribution works differently. Instead of receiving the RMD yourself and then donating it, you direct the money straight from your IRA to the charity. It goes directly from the account to the organization.
Because the money bypasses you entirely, the IRS does not count it as income. None of it shows up on your tax return as taxable income.
And here’s the part that makes it even better: it still counts toward your RMD. Dollar for dollar, a QCD satisfies your Required Minimum Distribution for the year.
The Benefits Add Up Quickly
- ✅ Zero taxable income — the distribution doesn’t appear as income on your return
- ✅ RMD satisfied — no penalty, no compliance issue
- ✅ Works even with the standard deduction — you don’t need to itemize to benefit
- ✅ Lowers your overall AGI — which can reduce how much of your Social Security gets taxed (more on that in the Social Security post)
- ✅ You can give up to $111,000 per year via QCD in 2026
That last benefit is the impact on Social Security taxation, which is often overlooked. Your Social Security tax is calculated based on your adjusted gross income. A lower AGI means less of your Social Security is taxed. The QCD creates a ripple effect of tax savings beyond just the charitable gift itself.
A Simple Example: Margaret
Margaret is 74 and gives $12,000 per year to her church. For years, here’s how it worked:
- She took a $12,000 RMD from her IRA
- Paid $2,640 in taxes on that distribution (at a 22% rate)
- Then wrote a $12,000 check to her church
Every year, $2,640 went to Uncle Sam that didn’t need to.
After learning about the QCD, Margaret contacted her IRA custodian and arranged for $12,000 to be sent directly from her IRA to her church. Her RMD is satisfied. The $12,000 is never counted as her income. Her taxes on that amount: $0.
She saves $2,640 every single year — just by changing the method of giving, not the amount.
Who Qualifies?
- You must be age 70½ or older
- The funds must come from a traditional IRA (not a 401(k) directly, though you can roll to an IRA first)
- The recipient must be a qualified 501(c)(3) organization — churches, synagogues, mosques, food banks, and most nonprofits qualify; donor-advised funds do not
- The maximum QCD is $111,000 per year per person in 2026 (married couples can each do $111,000 from their respective IRAs)
One Thing to Watch
The QCD has income percentage limits. You can’t give everything you have via QCD. But for most retirees who are giving a fixed amount to causes they already support, the limit is rarely an issue. The amounts most people give are well within what’s allowed.
The Bottom Line
If you’re over 70½ and you’re already giving to charity, the QCD is one of the easiest wins in retirement tax planning. You give the same amount you were always going to give. All while satisfying your RMD. You pay zero taxes on those dollars. And you might even reduce the tax on your Social Security in the process.
The only thing that changes is how the money gets to the charity.
Until next time,
Dre Griggs, CFP® | More Wisdom. Less Worry.
→ Wondering if your retirement strategy is truly tax efficient? Take the Tax-Smart Retirement Stage Assessment at https://obsidianwisdom.com/asessment