A qualified charitable distribution (QCD) is a transfer made directly from your IRA trustee to an eligible charity once you are at least 70½. The amount is excluded from your income, it counts toward any required minimum distribution (RMD) due that year, and for 2026 each IRA owner can exclude up to $111,000.
That exclusion is why a qualified charitable distribution usually beats withdrawing the money and writing a check, even after the One Big Beautiful Bill Act (OBBBA) added a charitable deduction for people who take the standard deduction. Below are the 2026 limits, eligibility and reporting rules, and a worked example using 2026 IRS figures.
IRS Publication 590-B defines a QCD as "a nontaxable distribution made directly by the trustee of your IRA (other than an ongoing SEP or SIMPLE IRA) to an organization eligible to receive tax-deductible contributions." Three mechanics follow from that sentence.
The money must move from the IRA custodian to the charity. In practice the custodian issues a check payable to the charity or sends the funds electronically. A withdrawal paid to you that you later donate is an ordinary taxable distribution followed by a regular gift.
The account must be an IRA. Traditional IRAs, rollover IRAs, inherited IRAs and Roth IRAs can all make QCDs. A SEP or SIMPLE IRA qualifies only when it is no longer ongoing, meaning the employer made no contribution for the plan year that ends in your tax year. Employer plans such as 401(k) and 403(b) accounts cannot make a QCD directly, so savers who want to use this route generally roll the money into an IRA first. If you still run a small business plan, our comparison of SEP and SIMPLE IRAs for small businesses explains when each one counts as active.
Only the taxable part of the IRA can be excluded. If your IRA holds nondeductible contributions, Publication 590-B says "the distribution is first considered to be paid out of otherwise taxable income," which leaves your basis in the account. Track that basis on Form 8606; our guide to reporting nondeductible IRAs on Form 8606 walks through the form.
The QCD limit has been indexed for inflation since SECURE 2.0. In IRS Notice 2025-67, the IRS states that the aggregate amount excluded under section 408(d)(8)(A) "is increased from $108,000 to $111,000" and that the one-time split-interest amount "is increased from $54,000 to $55,000." The limit applies per IRA owner, so a married couple who each own IRAs can exclude up to $222,000 between them on a joint return.
| Item | 2025 | 2026 | Source |
|---|---|---|---|
| Annual QCD exclusion per IRA owner | $108,000 | $111,000 | IRS Notice 2025-67 |
| One-time QCD to a split-interest entity | $54,000 | $55,000 | IRS Notice 2025-67 |
| Minimum age on the date of transfer | 70½ | 70½ | IRC 408(d)(8)(B) |
| RMD starting age (if you reach 72 after 2022) | 73 | 73 | IRS Pub. 590-B |
| Non-itemizer cash charitable deduction (married filing jointly) | None | $2,000 | OBBBA section 70424 |
| Floor on itemized charitable deductions | None | 0.5% of contribution base | IRC 170(b)(1)(I) |
| Standard deduction, married filing jointly | $31,500 | $32,200 | Rev. Proc. 2025-32 (2026) |
Unused capacity does not carry forward to later years.
The split-interest election is a one-time option created by SECURE 2.0. It lets you send QCD money to a charitable remainder annuity trust, a charitable remainder unitrust or a charitable gift annuity funded only by QCDs. The Form 1040 instructions say the annual limit "includes any amount (up to $54,000) of a one-time QCD to a split-interest entity," so the election uses part of your annual cap. For the gift annuity version, Publication 590-B requires fixed payments "of 5% or greater not later than 1 year from the date of funding." Our overview of the SECURE 2.0 Act covers the other retirement changes from the same law.
The QCD age and the RMD age used to match. They no longer do. Under the statute, a QCD must be made on or after the date the IRA owner "has attained age 70½." Required distributions now start later. Publication 590-B says that if you reach age 72 after December 31, 2022, "you must begin receiving required minimum distributions by April 1 of the year following the year you reach the age 73."
That gap of roughly two and a half years matters for planning. Between 70½ and 73 you can make QCDs even though no RMD is due, which shrinks the pre-tax balance that future RMDs will be calculated on. From 73 onward, the IRS says "A qualified charitable distribution will count towards your required minimum distribution." A QCD made early in the year can therefore satisfy part or all of the RMD before any taxable withdrawal is taken.
The test is your age on the transfer date, so a QCD sent in March of the year you reach 70½ in August does not qualify.
If an RMD is missed, the shortfall carries an excise tax reported on Form 5329, which our guide to Form 5329 additional taxes on IRAs explains.
There is one more age wrinkle. Since the SECURE Act removed the age cap on traditional IRA contributions, people over 70½ can still make deductible contributions. Publication 590-B reduces the excludable QCD amount by deductible contributions made for years you were 70½ or older that have not already reduced an earlier QCD. Someone who deducts a $7,000 contribution and then makes a $10,000 QCD in the same year can exclude only $3,000.
A QCD must go to an organization described in section 170(b)(1)(A), which is the list of public charities and similar organizations. IRS Notice 2007-7 states that QCDs "may be made to an organization described in § 170(b)(1)(A), other than supporting organizations described in § 509(a)(3) or donor advised funds that are described in § 4966(d)(2)."
That leaves these recipients outside the rules:
Churches, schools, hospitals and most community charities are eligible public charities. Our article on the public support test for 501(c)(3) organizations explains how a charity keeps public charity status.
Publication 590-B also says "you must have the same type of acknowledgment of your contribution that you would need to claim a deduction for a charitable contribution." Ask the charity for a written receipt showing the amount, the date and whether you received anything in return.
Errors usually happen when a preparer sees what looks like a fully taxable 1099-R and enters it that way.
Form 1099-R. For most of the QCD rule's history there was no special code, and the form showed an ordinary distribution. The 2026 Instructions for Forms 1099-R and 5498 add code Y "to identify a qualified charitable distribution (QCD)." Custodians use it with code 7 for a normal IRA, code 4 for an inherited IRA, or code K for assets without a readily available fair market value. For 2026, "the use of code Y to report a QCD is optional," so many 2026 forms will still not flag the QCD.
Form 1040. The Form 1040 instructions tell you to "enter the total distribution on line 4a. If the total amount distributed is a QCD, enter -0- on line 4b." When only part is a QCD, line 4b shows the non-QCD part. Before 2025, filers wrote "QCD" next to line 4b. The 2025 Form 1040 adds line 4c, where you check box 2 to mark a QCD. A split-interest election uses box 3, the entry "SIE" and an attached statement.
Form 8606. File it if the QCD came from a Roth IRA, or from a traditional IRA with basis when you also took another distribution from that IRA in the same year.
Because a QCD is excluded, it cannot also be deducted. IRS Publication 526 says "if the QCD is nontaxable, you can't claim it as a charitable contribution deduction." Leave it off Schedule A and off the new non-itemizer deduction.
OBBBA made two charitable changes that start in 2026, and both make the QCD more useful.
The 0.5% floor for itemizers. Under section 170(b)(1)(I), an individual's charitable deduction is "allowed only to the extent that the aggregate of such contributions exceeds 0.5 percent of the taxpayer's contribution base." For a couple with $300,000 of AGI, the first $1,500 of gifts produces no deduction. A QCD is never deducted, so the floor does not touch it. Our article on the 0.5% charitable floor and the two-page Schedule A covers the itemizer side in detail, and our guide to Form 1040 with itemized deductions explains when itemizing still makes sense.
The non-itemizer deduction. The IRS summary of the OBBBA provisions says that beginning in 2026, "individuals who do not itemize may deduct up to $1,000 of cash contributions made to eligible charitable organizations ($2,000 for married taxpayers filing jointly)." Gifts to donor-advised funds and supporting organizations do not count. Our guide to the 2026 charitable deduction for non-itemizers covers who qualifies.
The non-itemizer deduction is capped at $2,000 on a joint return, while a QCD excludes the whole gift up to $111,000 per owner. A household can use both, making QCDs and also writing a cash check that uses the $2,000 deduction.
Lower AGI also helps other calculations. OBBBA's $6,000 senior deduction, available "for 2025 through 2028" to people 65 and older, phases out above $75,000 of modified AGI ($150,000 for joint filers). The taxable share of Social Security benefits also rises with income, as the worked example below shows. Keeping IRA dollars out of AGI helps with both.
This is an illustrative example using 2026 figures from Rev. Proc. 2025-32: the married filing jointly standard deduction of $32,200, the $1,650 additional standard deduction per spouse aged 65 or older, and the 2026 joint brackets (10% up to $24,800, 12% up to $100,800).
A married couple, both 75, file jointly in 2026. They have $40,000 of pension income, $50,000 of Social Security benefits and a $30,000 RMD. They give $20,000 a year to their church. Their itemized deductions would be about $26,000, well below the $35,500 standard deduction plus age additions, so they take the standard deduction.
Option A: take the full $30,000 RMD, then write a $20,000 check to the church. Option B: send $20,000 to the church as a QCD, then withdraw the remaining $10,000 of the RMD.
| Line | Option A: RMD then gift | Option B: QCD |
|---|---|---|
| Taxable IRA distribution | $30,000 | $10,000 |
| Pension | $40,000 | $40,000 |
| Taxable Social Security (Pub. 915 worksheet) | $42,500 | $32,350 |
| AGI | $112,500 | $82,350 |
| Standard deduction plus two age additions | $35,500 | $35,500 |
| Senior deduction (2 x $6,000) | $12,000 | $12,000 |
| Non-itemizer cash charitable deduction | $2,000 | $0 |
| Taxable income | $63,000 | $34,850 |
| Federal income tax (2026 rate schedule) | $7,064 | $3,686 |
The QCD cuts AGI by $30,150 and federal income tax by $3,378, roughly 17% of the gift. The saving exceeds the 12% bracket rate because each IRA dollar removed also removes up to 85 cents of taxable Social Security. Option A's $2,000 non-itemizer deduction recovers only a small part of that gap. Both options satisfy the RMD and deliver $20,000 to the church.
Results change with income, state tax and gift size. For a broader retirement income plan, see our guide to CPA retirement planning.
Higher-income households often coordinate QCDs with Roth conversions, capital gains and estimated taxes. Our tax filing guide for high-net-worth individuals covers that wider planning. State treatment varies, so confirm whether your state follows the federal exclusion.
What is the qualified charitable distribution limit for 2026? Each IRA owner can exclude up to $111,000 of QCDs in 2026, up from $108,000 in 2025. A one-time QCD to a split-interest entity of up to $55,000 is allowed within that annual amount.
Can I make a QCD before I reach RMD age? Yes. QCDs are allowed from age 70½, while RMDs start at 73 under current rules. QCDs made between those ages reduce the IRA balance that later RMDs are based on.
Can a QCD go to a donor-advised fund or a private foundation? No. The statute excludes donor-advised funds and supporting organizations, and a private non-operating foundation is not one of the eligible section 170(b)(1)(A) organizations.
How do I report a QCD on my tax return? Enter the full distribution on Form 1040 line 4a, enter only the non-QCD part on line 4b, and check the QCD box on line 4c. Your Form 1099-R may or may not carry code Y for 2026, so the return entry is what matters.
Can I claim the new $1,000 or $2,000 non-itemizer deduction for a QCD? No. A QCD is already excluded from income, and the IRS does not allow a deduction for the same amount. The non-itemizer deduction can still apply to separate cash gifts.
Can I make a QCD from an inherited IRA? Yes, if the beneficiary is at least 70½ when the transfer is made. The custodian reports it with code 4, and with code Y when used.
Madras Accountancy supports individuals, businesses and CPA firms with tax preparation, bookkeeping and advisory work, including year-end reviews of IRA distributions and charitable giving. To discuss your 2026 return, contact our team.
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