Against a backdrop of ongoing economic and legislative shifts, you’ll want to tap every tool at your disposal to advise your philanthropic clients. Indeed, the One Big Beautiful Bill Act (OBBBA) is motivating many attorneys, CPAs, and financial advisors to zero in on charitable planning techniques that can deliver tax benefits and achieve the community impact that’s so important to their clients.
Near the top of almost every advisor’s list for clients 70 ½ and older is the Qualified Charitable Distribution (QCD). With nearly $17 trillion held in IRAs by 44% of U.S. households, advisors can’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 client’s 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 your retiree clients may find that their ability to benefit from itemized charitable deductions declines even further under the OBBBA. QCDs can help.
This email address is being protected from spambots. You need JavaScript enabled to view it. to help your client structure a QCD to an endowed field-of-interest or designated fund. Although donor-advised funds are not eligible to receive QCDs, we work with many families to establish other types of funds alongside their donor-advised funds to maximize QCD opportunities while also supporting the causes they care about.
The Community Foundation team is happy to help you structure charitable giving tools and plans to achieve your clients’ philanthropic goals—whether through beneficiary designations or any other type of charitable giving vehicle. This email address is being protected from spambots. You need JavaScript enabled to view it.!
The information contained in this video is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice.
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