Qualified Charitable Distribution (QCD) from an IRA
Direct transfer from a traditional IRA to a qualified public charity, available starting at age 70½. Counts toward your Required Minimum Distribution (RMD) but is excluded from Adjusted Gross Income (AGI) — more valuable than an itemized deduction because it also protects Medicare IRMAA and Virginia's age deduction.
A Qualified Charitable Distribution (QCD) is a direct transfer from a traditional Individual Retirement Account (IRA) to a qualified 501(c)(3) public charity. You can make QCDs starting at age 70½. The 2025 annual limit is $108,000 per taxpayer (indexed for inflation under current law). The QCD counts toward your Required Minimum Distribution (RMD) — but unlike a regular RMD taken as cash, a QCD is excluded from your Adjusted Gross Income (AGI) entirely.
That AGI exclusion is the power of the QCD. An itemized charitable deduction can only offset tax on money you'd already had taxed; a QCD prevents the income from ever being reported. That matters for three downstream calculations: (1) **Medicare IRMAA** — AGI two years prior drives your Part B and Part D premium surcharges; (2) **Social Security taxability** — the provisional-income formula uses AGI; (3) **Virginia age deduction** — the $12,000 age deduction under Va. Code § 58.1-322.03(13) phases out dollar-for-dollar above $50,000 single / $75,000 joint adjusted FAGI.
SECURE Act 2.0 (2022) added a one-time $54,000 election (2025, indexed) to direct a QCD to a split-interest charitable vehicle — a Charitable Remainder Annuity Trust (CRAT), Charitable Remainder Unitrust (CRUT), or Charitable Gift Annuity (CGA). The so-called "Legacy IRA" provision. One-time lifetime, not annual.
**QCDs cannot go to a Donor-Advised Fund (), private foundation, or supporting organization** — this is a hard statutory exclusion under IRC § 408(d)(8)(B)(i). They can go directly to an operating public charity, a community foundation's general fund (not DAF sub-account), a church, a school, or a hospital.
Tagged 🟢 — doing a QCD is DIY-doable. Instruct your IRA custodian to send a check directly to the charity (never distribute to you first — that breaks the QCD). Keep the acknowledgment letter.
State-specific notes
2025 annual limit is $108,000 per taxpayer (indexed for inflation under current law). The one-time split-interest QCD (Legacy IRA) limit is $54,000 in 2025. Both indexed. QCDs do NOT qualify as a DAF/private-foundation/supporting-org contribution under IRC § 408(d)(8)(B)(i).
Virginia starts from federal AGI, so a QCD reduces Virginia taxable income automatically and preserves the full $12,000 age deduction (Va. Code § 58.1-322.03(13)) by keeping you under the $50,000 single / $75,000 joint phase-out floor. Particularly valuable for retired Virginians who also have Social Security plus pension income that would otherwise push them into the phase-out.
West Virginia starts from federal AGI; a QCD reduces WV taxable income automatically. Starting 2026, WV exempts 100% of Social Security; a QCD helps preserve that exemption's income-test thresholds where they apply.
QCDs are a federal IRA rule under IRC § 408(d)(8) with no Alabama-specific variance — federal rules apply uniformly. Alabama starts from federal AGI under Ala. Code § 40-18-14, so the QCD's AGI exclusion flows through to the state return. QCDs are especially valuable given Alabama's divergence between federal and state itemization rules.