QCDs: A Tax Efficient Way to Give to Charity
by Danielle Woods
There is a misconception that tax liabilities go down during retirement years. That is not necessarily the case. The difference between paying taxes before and after retirement is that you are no longer earning the money needed to pay taxes. Your tax payments must come from your savings and the distributions from those savings accounts whether it be Social Security, pension income or retirement assets. You may also want to put some of your savings toward supporting your community, your church, or your favorite charitable causes.
The Anxiety of Generous Giving
But when you sit down to plan a large charitable gift, a wave of tax confusion often holds you back. You know that taking extra money out of your traditional IRA to fund a donation counts as taxable income. You worry that a large withdrawal will accidentally push you into a higher tax bracket or trigger IRMA, a Medicare premium surcharge.
This fear of hidden taxes can cause budgeting anxiety and lead to paralysis. You might try to offset the withdrawal by itemizing your deductions, but the rules are confusing and constantly changing. Because you are concerned about making a costly mistake that will wreck your monthly budget, you hold back. You want to be generous and make a meaningful impact right now, but the logistical complexity of the tax code keeps you frozen.
Building a Foundation of Clarity
I understand how overwhelming it feels to balance your own financial security with your desire to help others.
I became an attorney and a financial advisor because I wanted to help individuals build that foundation of security. Good planning removes the guesswork from your future. When your accounts are highly organized and proactively managed, you have the freedom to be generous without the constant fear of the unknown. We serve as your partner to handle the complex details so you can focus entirely on making a positive impact.
The Tax Relief of a QCD
When retirees finally decide to organize their charitable giving, the best solution is almost always a Qualified Charitable Distribution, commonly known as a QCD. You are eligible to utilize QCDs for pretax retirement accounts once you reach the age of 70 ½.
A QCD allows you to transfer funds directly from your IRA to qualified charities. The true beauty of this strategy is that it completely bypasses your tax return. In 2026, you can give up to $111,000 per year through a QCD. Because this money goes directly to the charity, it is never counted as taxable income. It does not inflate your Adjusted Gross Income, meaning it will not accidentally trigger the dreaded Medicare IRMAA surcharges or push you into a higher tax bracket.
Furthermore, if you are required to take minimum distributions from your retirement accounts (currently at age 73), a QCD counts toward that requirement. It is the absolute most tax efficient way to support the causes you care about for folks in this age range. Understanding these numbers replaces your tax anxiety with a clear roadmap, allowing you to keep your own budget perfectly predictable while still changing the world around you.
Watch: Seniors: Congress Just Changed Your Taxes
In this episode of Connecting the Dollars, Amanda and Emily discuss key tax law changes under the new OB3 Act. They break down the new standard deductions for those 65 and older, explain how phaseout income ranges work, and discuss crucial changes to charitable deductions. Emily provides strategic tips on how to plan ahead for these complex changes so you are not caught off guard next tax season.
You Do Not Have to Navigate Charitable Giving Alone
You deserve to enjoy the wealth you have built and the joy of giving without the constant worry of making a tax mistake. You do not have to figure out the IRS rules by yourself. If you are ready to map out a charitable giving strategy that protects your security while supporting your community, we are happy to talk.