Many people assume they’ll get a tax break for charitable giving, but for most households the answer is “it depends.” Historically, you generally needed to itemize deductions to benefit from a charitable deduction, yet the vast majority of tax returns claim the standard deduction (IRS data show 88.6% of returns used the standard deduction in tax year 2022).
Tax law has also shifted again for 2026. Beginning with tax year 2026, even if you take the standard deduction, you may be able to deduct up to $1,000 (single) or $2,000 (married filing jointly) of cash contributions to certain qualified organizations. For larger annual giving, this limited non-itemizer deduction may not capture the full value of your charitable intent.
That’s where a Qualified Charitable Distribution (QCD) can be an attractive way to give for eligible IRA owners.
What is a Qualified Charitable Distribution
A QCD is generally a nontaxable IRA distribution made directly by your IRA trustee to an organization that is eligible to receive tax-deductible charitable contributions, and you must be at least age 70½ when the distribution is made.
For 2026, IRS guidance indicates the annual QCD limit is up to $111,000 per eligible taxpayer (each spouse can have their own limit if each is otherwise eligible).
Why QCDs matter more now that RMDs commonly start at age 73
If you’re in or near retirement, Required Minimum Distributions (RMDs) are a major planning issue. Many IRA owners must begin taking RMDs by April 1 of the year after the year they reach age 73 (with different start ages applying to some older cohorts).
A properly completed QCD can count toward satisfying your RMD for the year. In practical terms, this means that once you reach your RMD years, you may be able to direct some (or all) of the amount you’re required to distribute to a qualifying charity while avoiding federal income inclusion on that distributed amount.
Who is eligible
According to IRS guidance, eligibility is based on age and account type. You must be 70½ or older at the time the distribution is made, and the distribution must be made from an IRA via the trustee.
This is particularly relevant for small business owners: Publication 590‑B notes that QCDs are generally not available from an ongoing SEP, SIMPLE IRA or 401-ks, so business owners should coordinate which IRA account will be used for the QCD.
How to implement a QCD correctly
To implement a QCD, the IRA distribution must go directly to the charity from the IRA trustee. You also need the same type of written acknowledgment you would need for a charitable contribution deduction.
You will still typically receive a Form 1099‑R showing the distribution, and you or your tax preparer will reflect the QCD on your return (IRS Publication 590‑B illustrates reporting the total distribution and indicating the QCD on the return). Beginning with 2025 Form 1099‑R instructions, the IRS added code “Y” in box 7 to identify QCDs, though the IRS has stated that use of code Y on a 2025 Form 1099‑R is optional.
Important Arizona note: do not claim an Arizona charitable tax credit on the same gift
This is a key planning point for Arizona donors.
If you are planning to use a QCD, you generally should not claim an Arizona charitable tax credit on that same contribution. The reason is that federal law requires that a QCD is only a QCD if a charitable deduction for the entire distribution would be allowable under IRC §170. However, the IRS generally requires taxpayers to reduce their federal charitable deduction by the value of a state or local tax credit received or expected to be received (with a limited exception when the credit does not exceed 15% of the payment amount).
Because Arizona’s charitable credits are often dollar-for-dollar up to a cap, claiming the full Arizona credit can cause that “entire distribution would be deductible” requirement to fail—meaning the distribution may not qualify as a QCD. If you want to use Arizona’s charitable tax credit system instead, make that gift from personal funds (for example, a checking account) and claim the credit on the appropriate Arizona credit form.
Final reminder
QCD rules are technical, and the “right” strategy depends on your account types, your age, your RMD status (now commonly age 73 or 75 for those born 1960 or after), and whether you were planning to use Arizona tax credits for charitable giving. Be sure to speak with your tax professional or us to determine whether a QCD is appropriate for your situation and to ensure it’s executed and reported correctly.
If you’re approaching retirement or already taking Required Minimum Distributions, a Qualified Charitable Distribution could be a powerful way to reduce taxes while supporting the causes you care about.
We work with clients across the country to implement tax-efficient giving strategies, while maintaining deep roots in Flagstaff and Sedona. Our team understands both federal planning strategies and the nuances of Arizona-specific tax considerations.
Schedule a complimentary consultation today to explore whether a QCD strategy fits your financial plan and how to avoid common pitfalls.
