QCD (Qualified Charitable Distribution) tax savings

QCD — the move post-TCJA charitable giving

Since the 2017 Tax Cuts and Jobs Act doubled the standard deduction, ~85% of taxpayers no longer itemize. Their charitable gifts no longer produce a tax benefit. The Qualified Charitable Distribution rebuilds the benefit for retirees age 70½+.

How QCD works

1. You're 70½ or older
2. You instruct your IRA custodian to send up to $105k/year (2024) directly to a 501(c)(3) charity
3. The transfer counts toward your RMD
4. The amount NEVER appears as income on your 1040

That last bullet is the key. The QCD doesn't go in as income then out as a deduction (which doesn't help if you don't itemize). It just doesn't appear at all — which lowers your AGI by the full QCD amount.

The QCD value vs no-QCD

For non-itemizers (most retirees):

• QCD: full marginal tax rate × gift = direct savings
• No-QCD: $0 tax benefit (standard deduction already covers more)

For itemizers (few retirees):

• QCD vs writing a check: similar after-tax cost, BUT QCD also reduces AGI which can lower Medicare IRMAA + Social Security taxability

The cap + restrictions

• $105,000 per individual per year (2024)
• Married couples: each spouse separately can do $105k
• Must come from a Traditional IRA or inherited IRA (NOT 401(k); roll over to IRA first if needed)
• Can satisfy ALL or part of RMD — common to use QCD to zero out RMD entirely