Summary of OBBB changes to Qualified Charitable Distributions (QCDs)
While the One Big Beautiful Bill (OBBB) went into effect in 2025, some changes were delayed until 2026. Of these include new considerations regarding Qualified Charitable Distributions (QCDs). The mechanics and basic eligibility for QCDs were unchanged by the OBBB and they are still used to reduce taxable income. However, beginning in 2026, the OBBB introduces new deduction limitations on charitable donations, not on QCDs. Starting in 2026 itemized charitable gift deductions will face a new 0.5% AGI (Adjusted Gross Income) floor, meaning only the portion above that threshold is deductible. There will be a new 35% cap on the tax value of these deductions for those in the highest marginal tax bracket. Because QCDs bypass the itemized-deduction system entirely and exclude the distribution from income, their relative tax advantage grows under the 2026 rules, especially for taxpayers who:
- Do not itemize
- Make large charitable gifts
- Are affected by AGI-based phaseouts and Medicare IRMAA brackets.
In short, QCDs become even more valuable under the OBBB, not because their rules changed, but because the alternative—itemizing charitable deductions—becomes less favorable starting in 2026.
Example:
- Age: 73-75 (Depending on DOB)
- RMD: $30,000
- Planned Charitable Giving: $10,000
- AGI: $150,000
- Filing status: Married Filing Jointly
Things to Consider:
- If you’re QCD-eligible (Age 70 ½), actively evaluate making QCDs in 2026. Since QCDs are not included in gross income, they continue to be a simple, effective tool to reduce RMD-driven taxable income, and they avoid the new itemizer floor/cap mechanics, which reduces the relative tax value of cash donations for many itemizers.
- Consider “bunching” your charitable contributions to maximize deductions in 2026. OBBB’s 2026 limits (0.5% AGI floor and 35% cap at the top bracket) mean that you can only deduct charitable gifts that exceed 0.5% of your adjusted gross income. So if you’re a high-income donor, you may want to “bunch” or group multiple years of deductions in a single year. Consult an advisor or tax professional if you’re considering this strategy.
- Donor-Advised Funds (DAFs) remain a powerful tactical tool. Use a DAF to make a large deductible contribution in a tax year where you want the deduction, then recommend grants to charities in later years. DAFs can also simplify donating appreciated non-cash assets such as stocks, which can be tax-efficient.
- Consider alternate charitable contributions. Consult with an advisor to discuss alternate charitable contributions, for example using appreciated securities to avoid capital gains tax.
- Consult with a financial advisor to review your annual charity contributions. Different factors to consider are your personal situation, state tax rules, and interaction with Social Security/RMD calculations can materially affect which strategy is best.
The start of a new year is a great time to start implementing tax-smart planning strategies. Work with a financial advisor or tax professional to discuss which tax strategies would work best for you. Reach out to Quotient Wealth Partners to help you get started.
