Making the Most of Your Charitable Giving

Are you 70½ or older, have an IRA, and want to support charitable causes? If so, we believe one of the most effective ways to give to charity is through your IRA. With the passage of the Tax Cuts and Jobs Act in 2017 and the dramatic increase in the standard deduction, many individuals find themselves receiving no tax benefit for their charitable gifts. Now, with the passage of the One Big Beautiful Bill Act and the higher standard deduction made permanent, together with limitations on charitable deductions, many taxpayers will continue to see minimal or no tax benefit from their charitable giving.

How Qualified Charitable Distributions Work

Problem solved! If you are at least 70½ and have an IRA, you can give directly to a qualified 501(c)(3) charity using pre-tax dollars through a qualified charitable distribution (QCD). That’s right, by giving from your IRA, these dollars are not included in your gross income and are never taxed. An added benefit for taxpayers with larger IRAs who are not dependent on income is that these QCDs can help draw down the IRA balance, potentially leading to lower required minimum distributions (RMDs) in those years when distributions are required.

Additional Benefits for Those Taking RMDs

For those taxpayers already eligible to take RMDs, the benefits of making QCDs can be significant.  For example, a QCD from the RMD:

• Can satisfy all or a portion of the RMD (up to $108,000 for 2025, and $115,000 for 2026)
• Reduces taxable income
• Decreases Modified Adjusted Gross Income (MAGI), potentially allowing you to benefit from the Enhanced Senior Deduction (for years 2025 through 2028)
• Decreases Adjusted Gross Income (AGI), potentially allowing itemizing taxpayers to deduct medical expenses
• May reduce the taxable portion of Social Security benefits
• May allow for more charitable giving, if you would otherwise be limited by AGI limits or charitable deduction floors

One thing to note: Because QCDs are tax-free IRA distributions, they cannot be counted as charitable deductions.

Work With Your Advisor to Navigate QCD Requirements

It’s important that clients consult with their tax advisors to fully understand the implications and benefits of making Qualified Charitable Distributions from an IRA and ensure compliance with all applicable rules and regulations. If you have any questions or are interested in learning how QCDs can benefit you, please contact your CRI advisor. Our team is ready to help you navigate and optimize your financial strategies.