A New Reason to Consider QCDs in 2026
A new tax rule for 2026 has me taking another look at QCDs with some of my retired clients.
Starting in 2026, charitable contributions claimed as itemized deductions are subject to a new 0.5% of AGI floor.
For example, if your AGI is $200,000 and you give $10,000 to charity, the first $1,000 of your contributions won't generate an itemized charitable deduction.
This makes Qualified Charitable Distributions (QCDs) even more relevant for charitably inclined IRA owners.
If you're at least 70½, you can make charitable gifts directly from your IRA to an eligible charity.
Instead of taking the IRA distribution as income and then potentially claiming a charitable deduction, the QCD is excluded from income altogether.
That's potentially valuable for a few reasons:
You don't have to itemize to benefit from a QCD.
If you're subject to Required Minimum Distributions (RMDs), the QCD can count toward your RMD.
Keeping the IRA distribution out of income can reduce AGI, which may help with other AGI-related calculations, including Medicare IRMAA premiums and the 3.8% Net Investment Income Tax.
In other words, if you're already giving generously to charity, how you give can matter.
There are some important rules. QCDs generally need to go directly from the IRA to an eligible charity, and they can't be made to a donor-advised fund (DAF). You also can't take a charitable deduction for the same gift.
One other change: beginning with 2026, custodians have new IRS reporting codes to identify QCDs on Form 1099-R. It's still a good idea to make sure your tax preparer knows which distributions were QCDs and to keep your charitable acknowledgments with your tax records.
This isn't the right strategy for everyone, but it's one I'm reviewing more closely with charitably inclined clients who are over 70½.
Linda Rogers, CFP®, EA, MSBA is the owner and founder of Planning Within Reach, LLC (PWR). Originally from New Jersey, Linda services clients throughout San Diego county and nationwide. She leads the design of PWR's investment portfolios which utilize broad, low-cost investments that integrate environmentally, socially, and governance (ESG) factors.
Planning Within Reach, LLC (PWR) is a fee-only and fiduciary wealth management firm offering one-time comprehensive financial planning, ongoing impact-focused investment management and tax preparation services in San Diego and nationwide. PWR is a woman-owned firm that specializes in busy professionals and impact investors. Planning Within Reach, LLC and their advisors do not receive commissions and do not hold any insurance licenses or brokerage relationships.