RMD Charitable Giving After Age 73: A Tax-Smart Strategy for Retirees

Starting in 2026, changes to charitable deduction rules under the One Big Beautiful Bill Act (OBBBA) will limit how much taxpayers—particularly high-income retirees—can save through itemized charitable deductions. For individuals age 73 and older, one tax-efficient charitable giving strategy stands out: using required minimum distributions (RMDs) to make direct charitable donations through a qualified charitable distribution (QCD).
This strategy can significantly reduce adjusted gross income (AGI) and overall tax liability in ways traditional deductions often cannot.

What Is a Qualified Charitable Distribution (QCD)?

A qualified charitable distribution (QCD) allows individuals age 70½ or older to donate up to $100,000 per year directly from their IRA to a qualified charity.

When done correctly:

• The distribution counts toward your RMD
• The donated amount is excluded from taxable income
• The charity receives the full amount
• The income never appears on your tax return

Why This Matters More Under the New Rules

Beginning in 2026, charitable deductions will:

• Only apply after donations exceed 0.5% of income
• Be subject to an effective 35% tax-benefit cap
• Produce less tax savings for many higher-income taxpayers

For retirees with large RMDs, this means charitable deductions may deliver far less benefit than expected.

By contrast, a QCD avoids these limitations entirely.

A Clear Example: $250,000 RMD and $26,000 Charitable Gift

Assume you are aged 73 or older and have a $250,000 required minimum distribution.

Why This Can Be More Powerful Than a Deduction

Excluding income is often more valuable than deducting it later. By reducing income at the source, a QCD can:

• Lower overall taxable income
• Reduce Medicare premium surcharges
• Decrease taxation of Social Security benefits
• Keep adjusted gross income (AGI) lower—so deductions, credits, and tax benefits that phase out or are limited by AGI are not restricted
• Improve the effectiveness of other deductions and credits

Because a QCD is excluded from income entirely, it does not increase AGI. This distinction is critical. Many deductions, credits, and tax benefits are reduced or eliminated as AGI rises. When income never enters AGI, those AGI-based limitations are avoided altogether.

With a traditional charitable deduction, income is included first and relief comes later—often partially and subject to limits. With a QCD, the income is excluded entirely.

Unlike itemized deductions, a QCD:

• Is not subject to income thresholds
• Is not capped by tax-rate limits
• Does not increase AGI
• Works even if you do not itemize

Important Rules to Keep in Mind

• QCDs must be paid directly from the IRA to the charity
• Donor-advised funds and private foundations do not qualify
• Proper reporting is essential to ensure the income is excluded

For taxpayers aged 73 and older, donating directly from required minimum distributions can be one of the most tax-efficient ways to give to charity. In this example, using a QCD for a $26,000 charitable gift means the charity receives the full amount—and that $26,000 is never included in adjusted gross income or taxable income. As charitable deductions become more limited and more benefits are tied to AGI levels, keeping income out of AGI altogether can be just as valuable as the charitable gift itself.