If you have a retirement account like an IRA and you are 70½ or older, you have a powerful tool that can be used to help the nonprofit organizations you care about. You can use the money you saved for retirement to make a real difference in your community. Giving directly from your IRA can also help lower your tax bill.
Gifts from your IRA can be tax-efficient ways to make your annual donations. This guide focuses on the first one: giving directly from your IRA.
Let's break down how this works in 2026 and keep the finance jargon to a minimum. Financial advisors love acronyms, so let's define the few you'll need:
Important Definitions:
RMD: Required Minimum Distribution. The minimum amount you must withdraw from your tax-deferred retirement accounts each year once you reach a certain age.
QCD: Qualified Charitable Distribution. A direct transfer of funds from an individual retirement account (IRA) to a qualified charity.
IRA: Individual Retirement Account. These personal, tax-advantaged savings accounts help you build wealth for your retirement. Unlike a traditional workplace plan, like a 401(k), you open and manage an IRA on your own through a bank, credit union, or brokerage firm. The account holds assets such as stocks, bonds, or mutual funds, allowing your money to grow over time. IRAs have withdrawal restrictions and requirements based on age, and withdrawals are generally taxable.
IRS: Internal Revenue Service. The Internal Revenue Service (IRS) is the U.S. federal agency that regulates, sets rules for, and enforces tax laws governing Individual Retirement Arrangements (IRAs)¹.
The IRS Requirement that starts at Age 73 (or 75) for your IRA
When you hit age 73 (or 75, depending on the year you were born), the IRS requires you to start taking a certain amount of money out of your tax-deferred retirement accounts every year. The age is 73 if you were born between 1951 and 1959, and 75 if you were born in 1960 or later.1 These required withdrawals increase your total income for the year, which usually means you have to pay more taxes. Sometimes, this extra income can even push you into a higher tax bracket.
The Smart Way to Give: The QCD
If you want to support a charity, there is a special rule that can help. If you are 70½ years of age or older, you can ask the company that holds your IRA to send money directly to a qualified charity.
This direct transfer is called a Qualified Charitable Distribution, or “QCD”.
A QCD can be valuable because fully appreciated or realized gains on money in your retirement accounts go to the charity of your choice. That amount doesn’t contribute to your annual taxable income under the IRS.
Even better, if you are old enough to take RMDs, the amount you donate directly to charity counts toward that required total.
Keeping that money out of your income can have other benefits too. A lower income can help reduce Medicare premium surcharges and the portion of your Social Security benefits that is taxed.
One important note: a QCD must go directly to a qualified charity. It can't be used to fund a donor-advised fund, a private foundation, or a supporting organization.
The Limits for 2026
For the year 2026, the IRS allows you to give up to $111,000 this way. If you are married, you and your spouse can each donate up to $111,000 from your own IRAs.
Why QCDs Are Better Than Cash in 2026
You might be thinking, “Why don't I just take the money out of my IRA, put it in my checking account, and then write a check to my favorite charity?”
You could do that, but it is usually more expensive. When you take the money out, it counts as income. While you can claim a deduction for giving cash to a charity, new tax laws in 2026 make it harder to get a full tax break.
Under the 2026 rules, people who itemize their deductions can only deduct the portion of their charitable donations above 0.5% of their income. So, if you make $160,000, you can't deduct the first $800 of your cash donations. By giving directly from your IRA, you bypass this rule entirely because the donation isn't taxed to begin with.
If you take the standard deduction instead, starting in 2026 you can deduct up to $1,000 in cash gifts ($2,000 if married filing jointly). That helps with smaller gifts, but it doesn't go far for larger ones, and a QCD isn't subject to that cap.
See the Difference
Let's look at an example to see how much a QCD can save you.
Imagine you are 75 years old, single, and required to take $150,000 out of your IRA this year. You also have $75,000 in other income (like Social Security or a pension).
You decide you only need $200,000 to live on, so you want to give the extra $25,000 to a charity.
Option A: Take the cash, then donate. If you take the full $150,000 out of your IRA, your total income is $225,000. If you write a check to a charity for $25,000, you will get an itemized tax deduction of $23,875 (because of the new 2026 limits). Your final taxable income is $201,125.
Option B: The QCD. Instead, you tell your IRA company to send $25,000 directly to the charity. You only take $125,000 out for yourself. Your total income is $200,000. Because you don't itemize, you take the standard senior deduction of $18,150. Your final taxable income is just $181,850.
By sending the money straight from your IRA, your taxable income is almost $20,000 lower.
How to Get Started
You don't want to give money away just for a tax break. But if you already want to support a cause you care about, giving directly from your IRA is often the most tax-efficient way to do it. Firms get busy near year end, so get started early. Keep receipts, connect with your tax preparer, and align on deadlines.
Note: You generally cannot do this from a workplace plan like a 401(k), so you would need to roll those funds into an IRA first. Always talk to your financial advisor or tax professional to make sure this fits with your specific situation.
At Farther, we are true financial partners to nonprofits and the donors who support them. Our mission is to maximize the value of every dollar, whether it's being saved, invested, or given. If you'd like to talk through your giving plans before year-end, we'd welcome the conversation.
This material is intended for general informational and educational purposes only. Individual situations will vary. Not intended to be reflective of results you can expect to achieve.
This information is not a specific recommendation, individualized tax or investment advice. Tax laws are subject to change, either prospectively or retroactively. Where specific advice is necessary or appropriate, individuals should contact their own professional tax and investment advisors or other professionals (CPA, Financial Planner, Investment Manager, Estate Attorney) to help answer questions about specific situations or needs prior to taking any action based upon this information.
Source:
- Internal Revenue Code, 26 U.S.C. § 408(a)(6) (2026).
