IRS Raises QCD Limit for 2024

Tax-free IRA distributions are a tax-advantaged way to donate to charity. The IRS has raised the Qualified Charitable Distribution (QCD) limit, allowing IRA owners aged 70½ and older to donate tax-free IRA distributions of up to $105,000 in 2024 to charity —up from $100,000 in previous years. This increase in the QCD limit presents a unique opportunity for retirees to support philanthropic causes while benefiting from tax-free distributions.

Who Qualifies for a QCD?

QCDs are available to IRA owners who are 70½ or older. For those aged 73 or above, these distributions can also satisfy the annual Required Minimum Distribution (RMD). Generally, IRA distributions are taxable, but QCDs are an exception if sent directly from the trustee to a qualified charity.

Key Benefits and Limits for QCDs

Each eligible IRA owner can exclude up to $105,000 in QCDs from their taxable income in 2024. If married couples meet the requirements and hold separate IRAs, they can jointly donate up to $210,000 tax-free. This strategy doesn’t require itemizing deductions, making it accessible even to those taking the standard deduction.

The QCD limit will adjust annually for inflation starting this year, with a planned increase to $108,000 in 2025. Strategically planning charitable donations can maximize tax savings now and in future years as these limits continue to rise.

How to Set Up a QCD

To make a QCD, contact your IRA trustee and request the distribution be sent directly to the qualified charity. Acting early can ensure the transaction is completed by year-end, meeting the deadline for 2024 tax benefits.

Reporting and Documenting QCDs

For 2024, QCDs should be reported on your tax return. In early 2025, IRA trustees will issue Form 1099-R, documenting all IRA distributions. On Form 1040 (or 1040-SR for seniors), record the total amount on Line 4a and enter “0” on Line 4b if the entire distribution was a QCD, marking it as such.

Retain a written acknowledgment from the charity specifying the donation date, amount, and a statement that no goods or services were exchanged. This document is essential for proper tax reporting and audit compliance.

For more details, consult IRS Publication 526, Charitable Contributions, and Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs).

Ellis Carter is a nonprofit lawyer with Caritas Law Group, P.C. licensed to practice in Washington and Arizona. Ellis advises nonprofit and socially responsible businesses on federal tax and fundraising regulations nationwide. Ellis also advises donors concerning major gifts. To schedule a consultation with Ellis, call 602-456-0071 or email us through our contact form.