Qualified Charitable Deductions 2025

Individuals who have reached 70 1/2 and are making charitable contributions in 2025 should take advantage of qualified charitable deductions (QCDs).

To use the QCD option, you have to inform your custodian to withdraw your contribution from your IRA account and send the contribution directly to the qualified charity you have identified. If you must take required minimum distributions (RMDs), you should make any QCDs first. This is a way to reduce your taxes, as the amount you contribute to the qualified charity will be tax-free, whereas RMDs are taxed.

In 2025, individuals are allowed to make QCDs of up to $108,000; married couples have a limit of $216,000. QCD limits are indexed annually to inflation. QCDs can be withdrawn from traditional IRAs and inherited IRAs. QCDs cannot be taken from company plan retirement accounts such as 401(k)s.

Individuals who make QCDs in order to obtain a tax advantage are not allowed to receive anything of value from the charity as a result of the contribution. This must be documented.

In 2025, the standard deduction for a joint return will be $30,000. In addition, for individuals 65 or older, there is an additional $1,600 increase in the standard deduction for each individual. So, for a couple in which both spouses are 65 or older, the standard deduction would increase to $33,200. Because of the increase in the standard deduction, rather than using itemized deductions, the use of the QCD option has a significant tax advantage.

For self-employed business owners, the QCD may help maximize tax deductions associated with qualified business income.

Making a gift into a Donor-Advised Fund at the Community Foundation is a great way to put your QCD to work in your community. Your one-time gift can be used to make grants to organizations you care about throughout the year. Be sure to get advice from your tax professional to determine how a QCD might fit your tax & charitable giving strategy. www.cfjodaviess.org/give

The Community Foundation of Jo Daviess County fosters giving and invests in communities in Jo Daviess County.