How retirees can get a bigger tax break for charitable gifts with QCDs

If you’re age 70½ or older, you can donate up to $108,000 in 2025. For married couples filing jointly, spouses aged 70½ or older can also transfer up to $108,000 from their IRA. The QCD limit now adjusts for inflation yearly, thanks to changes enacted via the Secure Act of 2022.  

Here are the other key things to know about QCDs, and how the move can benefit retirees.

When filing taxes, you claim the standard deduction or itemized deductions, whichever is greater. For 2025, the standard deduction is $15,750 for single filers and $31,500 for married couples filing jointly.

Your itemized deductions may include limited tax breaks for charitable gifts, medical expenses, and state and local taxes, among other items.  

However, 90% of filers don’t itemize, according to the latest IRS data, which prevents most taxpayers from claiming the charitable deduction.

There’s no tax deduction for a QCD, but “the amount distributed is excluded from income, which is better than a deduction,” CFP Juan Ros, a partner at Forum Financial Management in Thousand Oaks, California, previously told CNBC. 

QCDs won’t increase your adjusted gross income, or AGI, which can boost premiums for Medicare Part B and Part D, as earnings rise. Reducing your AGI can also minimize phaseouts, or benefit reductions, for other tax breaks enacted via President Donald Trump’s “big beautiful bill,” experts say.

Another benefit of QCDs is that transfers can help reduce your yearly required minimum distributions, or RMDs.

Most retirees must take RMDs from pretax retirement accounts starting at age 73 or face an IRS penalty. Your first deadline is April 1 of the year after you turn 73, and Dec. 31 is the due date for future years. 

RMDs can be a pain point for some retirees, depending on the size of their accounts. You calculate RMDs based on your previous year-end balance and an IRS “life expectancy factor.”

QCDs can be a great way to fulfill charitable intent without increasing AGI, according to CFP Jim Guarino, managing director at Baker Newman Noyes in Woburn, Massachusetts. He is also a certified public accountant.

“For my philanthropic clients, it’s almost a no-brainer,” he said.