 Against a backdrop of ongoing economic and legislative shifts, we want to help donors zero in on charitable planning techniques that can deliver tax benefits and achieve the community impact that’s so important to you.
Near the top of the list for donors age 70 ½ and older is the Qualified Charitable Distribution (QCD). With nearly $17 trillion held in IRAs by 44% of U.S. households, please don’t ignore Qualified Charitable Distributions, which allow an individual to transfer up to $108,000 (2025 limit) from an IRA directly to an eligible charity.
QCD rules themselves won’t change under the OBBBA, but QCDs may become even more relevant in light of other changes under the OBBBA. That’s because QCDs are excluded from income entirely, which means they actually directly reduce your AGI—unlike itemized charitable deductions. This is critically important under the OBBBA, which will continue to impact the number of people who itemize deductions, especially seniors.
Here are the details:
Under the OBBBA, the standard deduction for the 2025 tax year is $15,750 for single filers and $31,500 for married couples filing jointly.
Note that single filers 65 or older receive an additional $2,000 as part of the age-based extra deduction. On top of that, the OBBBA introduces a new “Senior Bonus” deduction of $6,000, available from 2025 through 2028. Altogether, this means a single filer aged 65 or older may be eligible for a total standard deduction of $23,750, subject to phase outs starting at income levels of $75,000 (for single filers).
QCDs count toward required minimum distributions (RMDs) without increasing taxable income—a key tax planning advantage.
By lowering AGI, QCDs can help control Medicare premium surcharges (IRMAA) and preserve other credits or deductions that phase out with increasing income.
Not only is the standard deduction increasing for 2025, but also, beginning in 2026, the OBBBA imposes a new 0.5% of AGI floor for deducting charitable contributions and also limits the tax benefit of charitable deductions for individuals in the top income brackets by capping the value of those deductions at 35%, even if the taxpayer’s actual marginal tax rate is 37%.
The bottom line here is that many of donors may find that their ability to benefit from itemized charitable deductions declines even further under the OBBBA. QCDs can help.
For a conversation about your tax plan, please consult with your accountant. For ideas on how to use your QCDs to improve the quality of life in Grundy County, please reach out to us. You can direct your QCDs directly to your favorite charities, or to a fund that you design at the Community Foundation of Grundy County – except donor advised funds. But you can accomplish great things via designated, field of interest, and scholarship funds and affect the causes that you care about! |
