QCD Limit, Rules, and How to Lower Your 2026 Taxable Income

For retirees facing Required Minimum Distributions (RMDs), the Qualified Charitable Distribution (QCD) isn't just a "definition"— it can be one of the most powerful tax planning tools in your arsenal.

For instance, making a QCD can lower your tax bill. This may reduce the amount of taxes on your Social Security benefits and minimize the impact of taking RMDs in retirement. Furthermore, your donation can make a significant difference to the charity you select.

However, like other retirement tax planning tools, there are limits for when and who can make a QCD. So, depending on your financial situation, QCDs may not be right for you.

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Here's more of what you need to know.

QCD 2026: Maximizing the new $111,000 limit

Once you reach a certain age, you must begin taking required minimum distributions (RMDs).

• RMDs are the minimum amount of money someone 73 or older (75 if born in 1960 or later) must withdraw yearly from their retirement savings plan.
• Taking these required distributions can increase your taxable income, which may force you into a higher tax bracket and consequently raise taxes on Social Security, Medicare premiums, and income phase-outs on certain tax breaks.

By making a QCD, you are distributing funds from your individual retirement account (IRA) to a qualified charity of your choice, thus potentially circumventing higher taxes on that income if you had distributed those funds through an RMD.

Thus, the new QCD limit may lower taxable income and maximize your tax savings. Below are the 2026 requirements:

• You must be age 70½ or older.
• You can donate up to $111,000 ($222,000 if married spouses).
• Have a traditional IRA, an inherited IRA, or an inactive SEP/inactive SIMPLE IRA.
• The "Q" stands for qualified charity (more on that later).

The QCD limit is subject to an inflation adjustment, so the amount will likely rise annually. This year, the higher amount may be particularly useful, as the 2026 charitable deduction changes can diminish the itemized deduction for some high-wealth taxpayers.

Why QCDs are more valuable under the 'Big Beautiful Bill'

The 2025 Trump/GOP tax and spending bill tightened donation rules for itemizing taxpayers in 2026.

For example, the entire amount of itemized charitable contributions may not be deductible this year. Instead, there will be an adjusted gross income (AGI) floor of 0.5%. Also, taxpayers in the highest tax bracket will have a new 35% "deduction cap" placed on contributions.

Making a QCD bypasses these new charitable deduction rules. That's because QCDs are an "above-the-line deduction," meaning you can take one whether you itemize or claim the 2026 standard deduction.

Once more, you can make a QCD for a variety of tax benefits. Namely, you can potentially reduce your income tax liability by:

• Lowering the amount of tax that you owe.
• Preventing phaseouts of other tax benefits (more below).
• Reducing high taxes on Social Security benefits.
• Lowering Medicare premiums.

QCDs are not counted as federal “taxable income” since they are transferred directly from your IRA to the qualified charity of your choice. Thus, they’re not generally subject to taxes on your return.

Using QCDs to qualify for the $6,000 'senior bonus' deduction

You may have heard of the new "senior bonus deduction." But only modified adjusted gross incomes (MAGI) under a certain income limit qualify. That's where a QCD can come into play.

If your income falls right on the line for qualifying for a tax break, you can lower that taxable income with a QCD, thus qualifying for certain income phase-outs, like those associated with the "senior bonus" (if you meet all other eligibility requirements).

You could also avoid a higher income tax bracket by making a QCD, since your gross income is lower (because QCDs are exempt from taxable income).

Plus, unlike standard charitable gifts, a QCD is an "exclusion" from income, not an itemized deduction. This means you can still take the standard deduction since QCDs are not subject to itemization (if you have no other itemized deductions, this may help lower your tax bill).

QCD eligibility: Who is restricted from this 2026 tax break?

Taxpayers younger than 70½ years old cannot donate a QCD. You also can’t make a QCD from 401(k)s, 403(b), deferred compensation, or Thrift Savings Plan (TSP), or other employer plan.

Additionally, the retirement savings plans below cannot make a QCD:

• Active simplified employee pension (SEP) plan.
• Active savings incentive match plan for employees (SIMPLE).

However, those with “inactive” SEP and SIMPLE plans (not currently receiving employer contributions) may be able to make a QCD. Check with your IRA provider for further details.

There are also rules about who you can donate to. You cannot make a QCD to:

• Donor-advised fund sponsors.
• Private foundations.

2026 QCD limits and making your distribution under new tax rules

Before you donate a QCD, there are other considerations to keep in mind. For instance, you can’t receive any benefit when you donate. A sports event ticket or a meal are just a couple of examples of disallowed benefits.

Additional QCD limits include:

• You cannot carry forward extra distributions into future years if you donate more than the threshold ($111,000 for 2026).
• If married individuals are both donating the threshold amount, each donation must come from their separate IRAs (not the same one).
• You cannot take a QCD as a charitable contribution itemized deduction.

State tax laws may have varying impacts on QCDs. Consult with a tax professional if you have any questions regarding your state’s rules.

How to make a QCD in 2026

QCDs are made by donating the funds directly from your IRA to the qualifying charity (or charities) you choose.

A qualified charity includes those that:

• Have a 501(c)(3) tax designation.
• Are eligible to receive tax-deductible contributions.

Not sure which organizations qualify? The IRS has a tool for searching tax-exempt organizations. However, it’s important to double-check with the charity beforehand to ensure they’re eligible to receive QCDs. Additionally, be sure to consult with your IRA custodian, as they may have more information to help you complete the transaction.

When a QCD isn’t your best 2026 tax strategy

While a QCD can save you valuable tax dollars, there are times when making one may not be your "best" financial move. For instance, if you:

• Need the cash from your IRA for living expenses. A QCD only effectively lowers your income if you have income to spare; otherwise, you should use your RMD funds for your daily living costs.
• Are using a 401(k) or other non-IRA account to meet RMD rules. Remember: QCDs must come from IRAs; since a 401(k) isn't an individual retirement account, you could need to roll those funds into an IRA in the prior year before using them for a QCD in the current year.
• Want to claim the charitable deduction for the same gift. The IRS doesn't permit "double-dipping" charitable contributions, meaning that if you exclude income from taxes with a QCD, you can't use that donation on your itemized return.

There may be more reasons why you shouldn't make a QCD in 2026 that weren't covered here. Consult with your IRA custodian or other professional if you have further questions about your tax position and whether a QCD is right for you.

Read More

• Required Minimum Distributions (RMDs): Key Points
• How the IRS Taxes Retirement Income
• Federal Income Tax Brackets and Rates
• Inherited an IRA? Five Things to Know