Retirement Retired Life

This Tax Move Is One of the IRS' Best Kept Secrets For Retirees

A powerful but underused IRS rule can help retirees give wisely while reducing taxable income.

By Adam Palasciano

Edited by Andrea Basse

Updated Dec. 27, 2025

While some tax breaks can become less useful in retirement, qualified charitable distributions — known as QCDs — remain a powerful way to support the causes you care about while reducing your tax bill, and are often one of the most overlooked senior benefits.

The best part is that QCDs work even if you do not itemize deductions. Yet many retirees are unaware that this strategy exists, leaving thousands of dollars in savings on the table. Here's how this IRS-approved move works.

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Qualified charitable contributions (QCDs) explained

Qualified charitable distributions (QCDs) allow retirees to send money directly from an IRA to an eligible charity. When done correctly, the distribution is excluded from taxable income, which can lower your overall tax liability for the year. QCDs are available only from IRAs — not 401(k)s — and must be made to qualified organizations.

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How QCDs work

Retirees may take either the standard deduction or itemize deductions, depending on which provides the bigger tax benefit. For 2025, the standard deduction is $15,750 for single filers and $31,500 for married couples filing jointly. Around 90% of taxpayers don't itemize deductions and therefore may only make limited charitable gifts. That's why QCDs are such a powerful alternative — they provide a tax benefit regardless of whether you itemize.

Since QCDs reduce your taxable income, they can also help lower your Medicare Part B and Part D premiums by keeping your adjusted gross income (AGI) down. A lower AGI may also protect you from phaseouts or benefit reductions tied to the recent OBBB (One Big Beautiful Bill).

For many retirees, this makes QCDs one of the IRS' most valuable and underused tools.

How retirees can benefit from QCDs

Once you reach age 70½, you can donate up to $108,000 directly from your IRA to qualifying charities in 2025. If you're married filing jointly, each spouse who meets the age requirement can make their own QCD, effectively doubling the potential tax-free giving.

Thanks to inflation adjustments implemented under the SECURE Act of 2022, this limit will increase annually. Unlike a regular charitable deduction, you cannot also claim a deduction for a QCD — but since it reduces taxable income, the savings are often more valuable.

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Why QCDs matter

QCDs offer retirees a simple, effective way to support nonprofits while lowering taxable income. They also help you meet required minimum distributions (RMDs) once they begin, without increasing your tax liability. This combination makes QCDs one of the most efficient charitable-giving strategies for retirees.

Reduce taxable income

QCDs lower the amount of income reported on your tax return, which can open the door to additional tax benefits. Since your AGI affects many deductions and credits, even a modest QCD can help you keep more of your money.

Lower taxable income may also reduce how much of your Social Security benefit is taxed for example, providing another hidden win for retirees.

Manage Medicare costs

Because Medicare premiums are tied to income, QCDs can help you avoid crossing into a higher premium bracket. Keeping your AGI lower through QCDs may protect you from potentially paying additional taxes as well as minimize phaseouts or benefit reductions.

This is especially helpful for retirees who expect higher-than-usual income in a given year.

Simplify your tax planning long-term

QCDs can make annual tax planning easier by reducing the number of moving pieces you need to track each year. Because the distribution never shows up as taxable income, it could streamline your return and remove the need to calculate or substantiate itemized charitable deductions.

This predictability may help retirees build a consistent giving strategy that aligns with long-term financial goals. Over time, using QCDs annually may reduce surprises at tax time and create a more stable financial outlook.

Support meaningful causes strategically

For retirees who already give to charity, QCDs offer a way to amplify impact. By donating from an IRA instead of after-tax dollars, you can give more without increasing financial strain. This approach can also help simplify your overall giving strategy for the year.

Bottom line

Qualified charitable distributions are one of the IRS' most overlooked tax strategies for retirees, yet they can meaningfully reduce taxable income and simplify charitable giving. Whether you want to lower Medicare costs, decrease the taxes on your Social Security income, or meet RMDs in a more efficient way, QCDs offer a powerful tool to integrate into your retirement plan.

Understanding how QCDs work — and using them consistently — can help you preserve more of your income while supporting the causes that matter most.

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