When the One Big Beautiful Bill Act (OBBBA) passed in July 2025, the spotlight was on extending the tax rates and a few other smaller provisions, like no tax on tips and overtime.
But not too many people were focused on how extending the higher standard deduction—and adding a bonus senior deduction–might influence charitable giving.
In a nutshell, retirees might find themselves benefitting more from available deductions, making it harder to realize any tax benefit from itemizing charitable donations.
Under the OBBBA, here’s a few of the deductions available:1
- $15,750 for single filers (2025)
- $31,500 for joint filers (2025)
- + $1,600 per person for individuals over 65
- + Up to $6,000 per person under the new senior deduction through 2028.
Taken together, these changes may weaken the case for itemizing charitable gifts, and they have some retirees looking for other tax-related ideas.
“According to Webster, wisdom allows us to apply information and knowledge to effectively and efficiently achieve the desired end result. Therefore, it behooves each of us to see wisdom diligently,” wrote Mick Owens in Diamond of Life: The Five P’s of Success and Significance.
What’s a QCD?2
Once you turn 73, you must start taking annual required minimum distributions from your traditional IRA. Those distributions are taxable when received by the IRA owner. However, with a qualified charitable distribution, QCD, these distributions become tax free if they are paid directly from the IRA to an eligible charitable organization.
In other words, the taxpayer never sees the income, so they don’t report it on their tax return.
Remember this: Whoever sows sparingly will also reap sparingly, and whoever sows generously will also reap generously. Each of you should give what you have decided in your heart to give, not reluctantly or under compulsion, for God loves a cheerful giver. And God is able to bless you abundantly, so that in all things at all times, having all that you need, you will abound in every good work. 2 Corinthians 9:6-8
How does a QCD work?
A QCD allows individuals who are 70½ years old or older to donate up to $108,000 (for 2025) to one or more charities directly from a taxable IRA instead of taking their RMDs. As a result, donors may be able to manage their tax position and avoid being pushed into higher income tax brackets that prevent phaseouts of other tax deductions.
Pro Tip: After reaching age 73, in most circumstances, you must begin taking the required minimum distributions from a traditional individual retirement account (IRA). Withdrawals are taxed as ordinary income. If a withdrawal is made before age 59½, a 10% federal income tax penalty may apply.
Next Steps
If you like the idea of supporting a charitable organization with your RMD, we can walk you through the pros and cons and help you evaluate what decision might be best for you. One of the first steps would be to connect with your tax professional. Or, if you would like, we can also loop in our tax planning department and see what guidance they can provide.
- IRS.gov, July 14, 2025
- Schwab.com, September 25, 2025
