Understanding how a qualified charitable distribution (QCD) works is important. Not only could the donation lead to several tax benefits, but the money donated may substantially impact the charity of your choice.
However, there are age and income-limit rules regarding QCDs, and potential tax implications if you choose to make one. Consult with your IRA custodian or other professional if you have further questions about your tax position.
Here are the ins and outs of QCDs.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
QCD 2024 limit: What it is and what you need to know
A QCD is a distribution from your individual retirement account (IRA) to a qualified charity of your choice.
To make a QCD in 2024, you must meet the following requirements:
- You must be age 70½ or older
- You can donate up to $105,000 ($210,000 if married spouses)
- Have a traditional IRA, inherited IRA, or inactive SEP/inactive SIMPLE IRA
- The "Q" stands for qualified charity (more on that later)
Tax benefits of QCDs
You can make a QCD for a variety of tax reasons. Namely, a charitable distribution from an IRA can help reduce the taxability of required minimum distributions (RMDs).
RMDs are the minimum amount of money someone 73 or older must withdraw yearly from their retirement savings plan. Taking these required distributions can increase your taxable income.
One primary benefit of a QCD is the potential reduction of tax liability. If you don’t need all the funds from your RMD, donating a portion as a QCD may potentially help:
- Lower the amount of tax that you owe
- Prevent phaseouts of other tax benefits, like itemized deductions
- Reduce high taxes on Social Security benefits
- Lower Medicare premiums
Ways in which QCDs lower taxable income
QCDs are not counted as “taxable income” since they are transferred directly from your IRA to the qualified charity of your choice. Thus, they’re not subject to taxes on your tax return.
QCDs can also lower taxable income in two additional ways:
- 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)
- Since your gross income is lower (because QCDs are exempt from taxable income) you may avoid a higher income tax bracket
How do you make a QCD?
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
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. Also, talk with your IRA custodian before you make a QCD, as they may have additional information for you to complete the transaction.
Who can’t make a QCD?
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 below retirement savings plans 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
What is the QCD limit for 2025?
The IRS has increased the amount of qualified charitable distributions by $3,000 in 2025. This means for tax year 2025:
- Individuals can donate $108,000 in QCDs, and
- Married individuals can make a QCD of $216,000
The QCD limit is subject to an annual inflation adjustment, so the amount will likely rise each year.
QCD rules and limits
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 limitations of QCDs include:
- You cannot carry forward extra distributions into future years if you donate more than the threshold ($105,000 for 2024, $108,000 for 2025)
- 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.
Related Content
-
I’m burned out at work, but I dread retirement boredom and loneliness. Now what?We asked the experts what to do when you're stuck on the fence.
-
Fewer Agents, Fewer Audits: How IRS Staff Cuts Are Changing EnforcementSignificant reductions in the IRS workforce appear to be increasing the number of 'no change' audit closures. The shift could potentially increase the overall tax gap — the difference between taxes that should have been paid and those that were.
-
Senate Seeks $6,000 'Bonus' Tax Deduction for Those Age 65 and OlderTax Reform Under Trump’s ‘big bill,’ the Senate Finance Committee has proposed a larger bonus tax deduction for older adults than the House. Will it pass?
-
Living Abroad as an American? Don’t Miss These Tax Breaks in 2025International Tax U.S. expats can reduce their tax burden by taking advantage of a handful of tax credits and deductions.
-
Summer Backyard Ideas With Added Tax Benefits for 2025Tax Tips Find out how these summer 2025 home projects can help you save on taxes next year.
-
Coverdell ESAs vs. 529 Plans: Which Should You Choose?Savings Accounts These savings accounts can offer tax benefits for school and retirement expenses. Here’s how.
-
Why Your California Utility Bill Could Increase Under Trump's Tax PlanState Tax Energy bills in the Golden State may shock you if Republican lawmakers in Congress remove certain energy tax credits through Trump's 'big, beautiful bill.'
-
Property Tax Relief Bill in Texas: What to Know for 2025Property Tax Texas residents could get major relief from property taxes in 2025. Here's a breakdown of the tax cuts.
-
Trump Tax Bill Targets Current EV Owners With New $250 Annual FeeTax Law Is the Trump administration about to make EV ownership more expensive?
-
Homeschoolers Could Soon Save on Expenses With 529 PlansSavings Accounts A new House GOP bill could change how you save for your child's homeschool education. Find out how.
