QCD Calculator — Qualified Charitable Distribution

A qualified charitable distribution is not a deduction. The money moves from the IRA custodian directly to the charity and never enters your gross income at all. That distinction is the entire reason the technique exists, and it is why a QCD can be worth far more than the same gift made in cash.

Deductions reduce taxable income. Exclusions reduce adjusted gross income, and AGI is the figure the rest of the tax system keys off. It determines how much of your Social Security is taxable, whether the 3.8% net investment income tax reaches you, what Medicare IRMAA surcharge you pay two years later, and in most states what your state tax is calculated on.

A retiree who gives $20,000 in cash and deducts it has the same taxable income as one who gives $20,000 by QCD, but a materially higher AGI. The second retiree may pay less tax on their Social Security and a lower Medicare premium in 2028. None of that shows up in a simple comparison of this year's tax bill.

Two changes take effect this year and they cut in opposite directions.

Non-itemizers can deduct up to $1,000 of cash gifts, or $2,000 filing jointly — the first such deduction since the pandemic-era provision lapsed after 2021. It is genuinely useful for smaller donors, but it has a limitation the headlines miss: the IRS is explicit that it is claimed when calculating taxable income and not in determining AGI. It is not an above-the-line deduction, so it does nothing for the AGI-linked thresholds a QCD reaches.

Itemizers now face a floor. From 2026 the first half percentage point of AGI worth of charitable giving is simply not deductible — on $115,000 of AGI that is $575 of giving that produces no benefit at all. For someone giving modestly every year, the floor is charged every year.

Both changes make the QCD relatively more attractive for anyone over 70½, because a QCD is subject to neither. There is no floor on it and no ceiling except the $111,000 annual limit.

QCDs become available at 70½. Required minimum distributions do not begin until 73. That gap is the most valuable and least used feature of the whole provision.

In those two and a half years you can move money out of a traditional IRA to charity without it ever being taxed, before RMDs start forcing income onto your return. Every dollar given this way permanently reduces the balance that future RMDs are calculated on, which lowers taxable income for the rest of your life and shrinks what a survivor would later inherit and be taxed on at single rates.

The mechanics are unforgiving, though, and mistakes are not fixable. The transfer must go directly from the custodian to the charity — take the money first and it is a taxable distribution no matter how quickly you write the cheque. Donor-advised funds and private foundations are excluded, which surprises people who already give that way. Only IRAs qualify, not 401(k) plans, so a workplace balance must be rolled to an IRA first.

One further trap catches people still working past 70½: deductible IRA contributions made after that age reduce the QCD exclusion dollar for dollar. Contributing and giving from the same IRA in the same period can quietly cancel the benefit.