New Incentives for Charitable Giving

A new law expands the popular Qualified Charitable Distribution (QCD) by allowing donors to fund life income gifts—such as a Charitable Gift Annuity (CGA) or a Charitable Remainder Trust (CRT)—directly from their IRA. While there are some limits, this is an important new way to create lasting charitable impact while providing lifetime income.

Key Facts

• Once-in-a-lifetime opportunity: This special election may be made only once, in a single tax year.
• Gift limit: In 2025, the maximum amount is $54,000 (indexed annually for inflation).
• Eligible beneficiaries: The annuity or trust payments may benefit only the donor and/or the donor’s spouse.
• Tax treatment: Payments are fully taxable as ordinary income (not capital gains or tax-free).
• RMD satisfaction: These gifts count toward your Required Minimum Distribution (RMD).
• Age requirements: You may make QCDs beginning at age 70½, even though RMDs start later (currently age 73).
• No itemized deduction: However, the QCD is excluded from taxable income “above the line,” making it essentially a tax-free gift.
• Inflation indexing: Both the regular annual QCD limit ($108,000) and the life income QCD limit ($54,000 in 2025) are adjusted for inflation each year.

Why This Matters

• Massive opportunity: IRAs represent trillions of dollars in assets, especially among Baby Boomers.
• Dual benefit: Donors can lock in guaranteed lifetime income while also making a significant legacy gift.
• Future growth: As Congress and nonprofits see the success of this program, it may expand, making life income gifts an even more important part of charitable planning.