What if you could give $108,000 to charity this year, satisfy your required IRA withdrawals, and pay zero taxes on that money—all while most of your neighbors are writing checks after paying full income tax? Most retirees don’t receive tax benefits for charitable gifts since over 90% of taxpayers don’t itemize their deductions How retirees can get a bigger tax break for charitable gifts with QCDs.
Meanwhile, RMDs can push taxpayers into higher tax brackets and increase Medicare premiums Reducing RMDs With QCDs in 2025 and 2026 | Charles Schwab. The typical approach of taking an RMD, paying taxes, then donating cash means you lose up to 42% of your gift to taxes first.
This guide reveals how the QCD at 70½ rule lets you beat the RMD age of 73, enabling you to donate up to $108,000 per person tax-free in 2025 Qualified Charitable Distributions (QCDs) | planning your IRA withdrawal | Fidelity through qualified charitable distribution strategies. You’ll discover the step-by-step process to execute your first IRA charitable giving, avoid common $5,000+ mistakes that disqualify your QCD, and see real examples showing $2,400 to $10,500 in tax savings that reduce RMD taxes.
The 70½ Advantage: Why This Tiny Age Difference Saves Thousands
A Qualified Charitable Distribution (QCD) lets you send money straight from your IRA to charity. The IRS doesn’t count it as income. You pay zero tax on it.
Here’s what makes this powerful: You can start QCDs at 70½. But required minimum distributions (RMDs) don’t kick in until 73. That’s a 2.5-year window where you control the game.
In 2025, you can give up to $108,000 per person through QCDs. Married couples can do $216,000 combined. The limit goes up to $115,000 in 2026 because of inflation adjustments.
Why does this beat regular charitable deductions?
Most people can’t use them anymore. About 90% of taxpayers take the standard deduction instead of itemizing. The 2025 standard deduction is $17,750 for singles 65 and over. For married couples, it’s $31,500. Seniors also get an extra $2,000 if single or $1,600 per person if married.
Unless your itemized deductions beat those numbers, your charitable gifts save you nothing on your taxes.
QCDs are different. They work even if you take the standard deduction. The money never shows up as income in the first place. It’s like it never left your IRA, except a charity gets it instead of you.
This matters more as you age. Once RMDs start, you’re forced to take money out and pay tax on it whether you need it or not. QCDs let you redirect that money before the IRS touches it.
How QCDs Save $2,400 to $10,500+ in Taxes (With Proof)
Let’s look at real numbers.
Example 1: Eileen, age 72
Eileen usually gives $10,000 to charity each year. She’s in the 24% tax bracket.
The old way: Take $10,000 from her IRA. Pay $2,400 in federal taxes. Donate what’s left.
The QCD way: Send $10,000 directly to charity. Pay zero tax.
She saves $2,400. Same donation. Different method.
Example 2: Susan, age 75
Susan plans to give $25,000 this year. Between federal and state taxes, she’s in a combined 42% bracket.
Without a QCD, she’d pay $10,500 in taxes on that IRA withdrawal.
With a QCD, she pays nothing.
The hidden cost of doing it wrong
Say you want to give $35,000 to charity. You have enough in your IRA to cover it.
Option A: Take $35,000 RMD, pay tax, then donate cash
- Tax hit: $12,180 (at 32% combined bracket)
- You need to take out more to cover the tax bill
- Total cost to you: $47,180
Option B: Do a $35,000 QCD
- Tax hit: $0
- Total cost to you: $35,000
The difference? $12,180 stays in your pocket instead of going to the IRS.
Beyond income tax
Lower income helps in other ways. It affects your Medicare premiums. If your income crosses certain thresholds ($200,000 single, $250,000 married), you pay surcharges called IRMAA. A QCD can keep you under those lines.
It also affects how much of your Social Security gets taxed. And whether you owe the 3.8% Net Investment Income Tax.
Simple math: Your QCD amount times your tax bracket equals your savings.
$20,000 QCD × 24% bracket = $4,800 saved $50,000 QCD × 35% bracket = $17,500 saved
Every dollar you route through a QCD instead of taking as income is a dollar the IRS can’t tax.
Do You Qualify? The 5 Non-Negotiable QCD Requirements
Requirement 1: Age
You must be at least 70½ years old on the day you take the distribution. Not just sometime that year. The actual day.
If you turn 70 on March 15, you turn 70½ on September 15. You can’t do a QCD on September 14. You can on September 15.
Requirement 2: The right account
These work:
- Traditional IRA
- Rollover IRA
- Inherited IRA
- Inactive SEP IRA
- Inactive SIMPLE IRA
These don’t:
- Active 401(k), 403(b), or other employer plans
- Roth IRAs (you can do it, but there’s no tax benefit)
If your money is in a 401(k), roll it to an IRA first. Then you can do QCDs.
Requirement 3: Eligible charities only
The organization must be a 501(c)(3) public charity.
These don’t qualify:
- Donor-advised funds
- Private foundations
- Supporting organizations
Call the charity and ask for their tax ID. Make sure they’re a public charity, not one of the excluded types.
Requirement 4: Direct transfer
The money must go straight from your IRA to the charity. If the check comes to you first, even if it’s made out to the charity, you risk problems. Always have your IRA custodian send it directly.
Requirement 5: No benefit back
You can’t get anything in return. No event tickets. No dinner. No auction items. No tote bag.
Zero benefit. Pure gift.
If you get something back, the IRS treats it as a regular distribution. You pay tax on the whole amount.
How to Execute Your First QCD (Without Costly Mistakes)
Timing matters more than you think
Do your QCD before taking any other distributions from your IRA. The IRS uses “first dollars out” rules. If you take a regular distribution first, you can’t retroactively make it a QCD.
Step 1: Plan your giving
Decide how much you want to donate this year. List which charities. Make sure each one qualifies.
Step 2: Contact your IRA custodian
Call Fidelity, Schwab, Vanguard, or whoever holds your IRA. Say “I want to do a qualified charitable distribution.”
They’ll send you a form or do it over the phone.
Step 3: Provide charity details
You need:
- Legal name of the organization
- Mailing address
- Tax ID number
Get this directly from the charity. Don’t guess. One wrong digit and the transfer fails.
Step 4: Get confirmation
The charity should send you a written acknowledgment. Your custodian will send confirmation too. Keep both.
Step 5: Watch for the new tax form
Starting in 2025, your Form 1099-R will show a new Code Y in box 7. This tells the IRS it’s a QCD. Your tax preparer needs to see this.
The December problem
The deadline is December 31. No exceptions. No extensions.
But here’s the catch: The charity must receive the money by December 31. Not just the date you requested it.
If you use a checkbook IRA and write a check on December 28, but the charity doesn’t cash it until January 3, it doesn’t count for 2025.
Start early. October or November is better than December.
Use QCDs to Slash Your RMD Tax Bill (Even Before 73)
The golden window: 70½ to 72
This is your secret advantage. You can do QCDs starting at 70½. But RMDs don’t start until 73.
That gives you 2.5 years to give money away tax-free without being forced to take anything out.
How QCDs satisfy RMDs
Once you hit 73 and RMDs start, QCDs count toward your requirement.
Example: Peter is 75. His RMD is $25,000. He does a $25,000 QCD.
Result: RMD satisfied. Taxable income: zero.
The critical timing rule
Your QCD must happen before you take your RMD. You can’t take the RMD first and then fix it with a QCD later.
Wrong way: Alice takes her $5,600 RMD in January. In June, she decides to do a $10,000 QCD.
Result: She still pays tax on $5,600. The QCD doesn’t erase what already happened.
Right way: Alice does the $10,000 QCD in January. This covers her entire $5,600 RMD and leaves $4,400 of pure charitable giving.
Result: No taxable RMD. All tax-free.
What happens to excess QCD
Say your RMD is $15,000 but you do a $30,000 QCD. The extra $15,000 doesn’t roll over to next year. Each year stands alone.
You still get the tax benefit. You just can’t bank it for later.
Avoid These QCD Mistakes (That Cost $2,000 to $10,000+)
Mistake 1: Missing the age by one day
You turn 70½ on July 15. You do the QCD on July 14.
The IRS says no. You pay tax on the whole amount. Wait one more day.
Mistake 2: Check made out to you
Even if the check is written to the charity, if it comes to your mailbox first, you have a problem. Some custodians do it this way. Tell them no. Direct transfer only.
Mistake 3: Making deductible IRA contributions
This is sneaky. If you make a deductible IRA contribution in the same year as a QCD, it reduces your QCD exclusion dollar-for-dollar.
You contribute $7,500 deductible. You do a $15,000 QCD. Only $7,500 is tax-free. The other $7,500 is taxable.
Cost: About $2,000 in unnecessary taxes (at 24% bracket).
Mistake 4: Taking RMD first
We covered this, but it’s worth repeating. Once you take your RMD, it’s locked in. A later QCD won’t change it.
Mistake 5: Giving to donor-advised funds
These are popular. But they don’t qualify for QCDs. If you send money there, you pay tax on the distribution.
Use a direct charity instead. You can still use donor-advised funds for other gifts.
Mistake 6: Exceeding the limit
In 2025, the limit is $108,000 per person. Anything over that is taxable. And it doesn’t carry forward.
Give $120,000? You pay tax on $12,000.
Mistake 7: Late December checkbook IRA
If you write a check from your IRA on December 28 and the charity doesn’t deposit it until January, it counts for the wrong year.
You lose that year’s tax benefit. And you might accidentally exceed next year’s limit if you’re also giving then.
3 Advanced QCD Moves for Maximum Tax Savings
The one-time $54,000 special option
New for 2023 and continuing: You can do a one-time QCD of up to $54,000 to a charitable remainder trust or charitable gift annuity. This is in addition to your regular $108,000 limit.
This option is complex. You’ll need professional help. But it can work if you want to set up ongoing income from your gift.
Spousal double-up
Each spouse with an IRA can do their own $108,000 QCD. That’s $216,000 combined if both of you are 70½ or older.
The IRA must be in your name. You can’t do a QCD from your spouse’s IRA. But if you both have IRAs, you both get the limit.
Multiple charities
You’re not limited to one organization. Give $25,000 to your church, $15,000 to a hospital, $10,000 to an animal shelter. As long as the total stays under $108,000, you’re fine.
Medicare planning
Income-Related Monthly Adjustment Amounts (IRMAA) can add hundreds per month to your Medicare premiums. The brackets start at $200,000 for singles and $250,000 for married couples.
If you’re near these thresholds, QCDs can push you under. Lower income means lower premiums.
Inherited IRA strategy
If you inherited an IRA and you’re 70½ or older, you can do QCDs from it. This works even if the original owner was younger.
It’s a good way to handle required distributions from inherited accounts while supporting causes you care about.
When QCDs Beat (or Lose to) Other Giving Methods
QCD vs. taking RMD then donating
QCD wins almost every time. Taking the RMD creates income. Donating afterward might get you a deduction, but only if you itemize. And even then, the income still affects your AGI for other purposes.
Typical savings: $4,000 to $12,000 per year depending on your bracket.
QCD vs. donating appreciated stock
If you still itemize and you own stock that’s gained value, donating the stock directly might beat a QCD.
Why? You avoid capital gains tax and get a deduction for the full value.
But most retirees don’t itemize anymore. For them, QCDs win.
QCD vs. donor-advised funds
Donor-advised funds don’t accept QCDs. But you can use both strategies.
Use appreciated stock or cash for the donor-advised fund if you itemize. Use QCDs to satisfy RMDs and reduce income.
QCD vs. standard deduction
This isn’t really a competition. QCDs work with the standard deduction. That’s the whole point.
If you itemize, you have more options. If you don’t, QCDs are often your only way to get tax benefit from giving.
When not to use QCD
You’re under 70½. You can’t.
You’re in a very low tax bracket (10% or 12%). The benefit is smaller, though still real.
You want to build up a donor-advised fund for future giving. Use cash or stock instead.
How Your State Treats QCDs (It Varies)
Federal law is clear: QCDs don’t count as income.
State law? Less clear.
Most states follow federal treatment. If it’s not income federally, it’s not income for state purposes either.
But some states have their own rules. A few might require you to add the QCD back when calculating state income.
If you live in a state with income tax, check with a tax advisor there. Don’t assume anything.
States without income tax (Florida, Texas, Nevada, and others) make this simpler. No state income means no state QCD complications.
The federal savings alone usually make QCDs worth doing. State treatment is a bonus in most places.
Start Your QCD This Week
You can give up to $108,000 tax-free starting at age 70½. That’s 2.5 years before RMDs force you to take money out.
Works even if you take the standard deduction. Saves $2,400 to $10,500+ in taxes every year for most people.
The rules are strict: Direct transfer to a 501(c)(3) public charity only. No donor-advised funds. No benefits in return.
Deadline: December 31, 2025. No extensions.
What to do right now
Call your IRA custodian this week. Ask them about their QCD process. Get the forms.
Don’t wait until December. Processing takes time. Late requests fail.
If you already give to charity, this costs you nothing. Same gift. Different path. Thousands saved.
QCDs at 70½ remain one of the IRS’s best-kept secrets for reducing RMD taxes while supporting causes you care about.
