QCD tax strategies that support philanthropic goals
The Internal Revenue Service (IRS) announced updates to retirement contribution limits for 2025. Included in these adjustments are updated limits to Qualified Charitable Distributions (QCDs). The changes, largely influenced by the SECURE 2.0 Act, may be of interest to high-net worth families, executives and entrepreneurs seeking tax strategies that support philanthropic goals.
2025 vs 2024 charitable donation limits
| 2025 | 2024 | |
|---|---|---|
| Qualified Charitable Distribution Limit | $108,000 | $105,000 |
| One Time donation to a Charitable Remainder Trust (CRT) or Charitable Gift Annuity (CGA) | $54,000 | $53,000 |
Enhance charitable contribution tax savings using a QCD
If you are age 70 ½, have an IRA, and want to make charitable contributions tax efficiently, you should consider a qualified charitable distribution (QCD). A QCD is a distribution from an IRA that is transferred directly from the IRA custodian to the charity. When the taxpayer files their tax return, they can then exclude the amount of the QCD from their taxable income. Please note, there is no charitable deduction on Schedule A associated with the QCD as the amount was excluded from income initially. View this in contrast with the taxpayer who does not choose to make a QCD but rather takes his regular IRA distribution normally and then decides to donate to these after-tax dollars to charity. This taxpayer would report the full IRA distribution as taxable income and then deduct the donation to charity as an itemized deduction on Schedule A.
Learn why this second option is often not the most tax efficient means of making a charity donation: How Taxpayers Can Save with a Qualified Charitable Distribution.
We would be pleased to discuss with you in more detail how this charitable giving technique might work for your specific financial situation. Contact your Keiter Opportunity Advisor or our Family, Executive & Entrepreneur Advisory Services team | Email | 804.747.0000
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About the Author
Ginny Graef, CPA, Partner
Ginny enjoys working closely with her clients and their team of legal and financial advisors to provide tax planning solutions that meet her clients’ specific needs and goals. Ginny’s areas of expertise include income, gift, and trust and estate compliance and planning services. In addition, she focuses on compliance and consulting related to investment partnerships.
More Insights from Ginny GraefThe information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.
