Making Qualified Charitable Distribution (QCD)

qcd

A qualified charitable distribution (QCD) can be a great way to reduce required minimum distributions (RMDs) and optimize the tax benefits of giving.

For tax year 2026, you can donate up to $111,000, and you can also use up to $55,000 of a QCD to make a one-time donation to a charitable remainder trust (CRT) or charitable gift annuity (CGA). For married couples, you can each donate up to your individual annual limit. These are exempt from taxation if they come from a qualified account and go to a 501(c)3 organization such as WDEA (** see below). That said, the IRS does not allow you to make a charitable contribution from a workplace retirement plan, like a 401(k)

While the One Big Beautiful Bill Act (OBBBA) didn't change QCD rules, the law impacts the deductibility of charitable donations in 2026. Here's how the OBBBA will affect charitably inclined taxpayers:

For itemizers, the OBBBA limits the deductibility of charitable donations to the amount that exceeds 0.5% of their adjusted gross income (AGI)—that is, their total income minus certain adjustments. For example, if your AGI is $160,000, you may deduct only donations that exceed $800 ($160,000 × 0.5%). Therefore, if you donate $35,000 in cash to a nonprofit, only $34,200 is deductible. Because itemizers may see a reduction in the tax benefits of donations under the new rules, this change could make the tax savings from a QCD even greater than itemizing charitable donations in some situations. In addition, for 2026 onward, all itemized deductions will be limited to a maximum tax benefit of only 35 cents on the dollar (versus the prior max of 37 cents).
For non-itemizers—who previously were ineligible to claim a tax deduction for charitable donations—starting in 2026, the OBBBA allows single filers to deduct up to $1,000 ($2,000 for married couples filing jointly) for cash donations to operating charities. This extra deduction is worth considering when deciding to donate cash or through a QCD.

**As the tax code is constantly changing, talk to your financial advisor and tax advisor about making a QCD. For information about making a donation to WDEA please contact the WDEA President or use our FORM here.

QCD = Qualified Charitable Distribution
RMD = Required Minimum Distribution
AGI = Adjusted Gross Income
IRA = Individual Retirement Account