Compliance November 15, 2024

IRS Raises Limit on Tax-Free Charitable Donations From IRAs to $105,000 for 2024

The limit is up from $100,000 in previous years.

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The IRS announced that eligible owners of individual retirement account arrangements can use distributions to donate up to $105,000 to qualified charities in 2024 without incurring taxes on the distributions. This marks an increase from the $100,000 limit in previous years.

Qualified charitable distributions are available to IRA owners aged 70.5 and older and provide a tax-efficient way to support charitable organizations. For individuals aged at least 73, QCDs can also fulfill part or all of their required minimum distribution for the year.

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While most IRA distributions are taxable, QCDs avoid taxation if they are sent directly to a qualifying charity by the IRA trustee. In 2025, each eligible individual can donate up to $105,000 tax-free, and married couples with separate IRAs may donate up to $210,000 combined.

Starting this year, the QCD limit is subject to annual inflation adjustments. In 2025, the limit will rise to $108,000. This adjustment reflects a broader effort to align tax-related thresholds with economic conditions.

Notably, QCDs do not require donors to itemize deductions, an attractive option for individuals who take the standard deduction. To ensure donations are processed in time, the IRS advises IRA owners to work with their trustees well before the end of the calendar year.

For 2024 donations, QCDs must be documented on the tax return filed in 2025. The IRA trustee will issue Form 1099-R, which details all distributions. The total distribution amount is entered on Line 4a of Form 1040 or Form 1040-SR, with “0” recorded on Line 4b if the entire distribution qualifies as a QCD.

Additionally, donors must secure written acknowledgment from the charity confirming the donation amount, date and that no goods or services were received in exchange for the contribution.

With the expanded limits and built-in inflation adjustments, QCDs remain a valuable tool for IRA owners looking to support charitable causes while minimizing their tax burdens.