By: Chris Brauner

As retirement begins, income often starts coming from several different sources. Required minimum distributions, Social Security, pensions, and investment income can quickly add up and create a larger tax burden than expected.

At the same time, many retirees continue supporting the charities and causes they care about. What is often overlooked is how charitable giving and retirement income planning can work together to create tax savings.

A New Deduction for Seniors

From 2025 through 2028, taxpayers age 65 and older may qualify for a temporary senior deduction of up to:

• $6,000 for individuals
• $12,000 for married couples filing jointly

However, the deduction begins phasing out once income exceeds certain thresholds. Many retirees may unintentionally fall above those limits once required distributions and other income sources are included.

That makes managing taxable income especially important.

Where QCDs Can Help

For IRA owners eligible to make Qualified Charitable Distributions (QCDs), generally those age 70½ or older, a QCD may provide an effective solution for those who already give to charity.

A QCD allows funds to be transferred directly from an IRA to a qualified charity. When completed in accordance with IRS rules, the distribution is excluded from taxable income and can count toward the IRA owner’s required minimum distribution (RMD).

Rather than taking a taxable IRA distribution and then making a charitable donation, eligible taxpayers can direct funds straight to charity through a QCD. This approach may help satisfy charitable giving goals while reducing adjusted gross income.

This strategy may be particularly valuable for taxpayers seeking to manage income levels that affect deductions, credits, or Medicare premium surcharges.

Why This Matters

Lowering adjusted gross income (AGI) can create several potential benefits, particularly for retirees whose income affects taxes, deductions, and healthcare costs.

A QCD may help:

• Keep income low enough to qualify for the senior deduction. The deduction begins to phase out at $75,000 of income for single filers and $150,000 for married couples filing jointly. By reducing AGI, a QCD may help taxpayers remain eligible for all or part of the deduction.
• Reduce the taxation of Social Security benefits. The portion of Social Security benefits subject to federal income tax depends on overall income levels. Lower AGI may result in a smaller percentage of benefits being taxed.
• Help avoid higher Medicare premiums. Medicare Part B and Part D premiums increase when income exceeds certain thresholds through the Income-Related Monthly Adjustment Amount (IRMAA) rules. In 2025, IRMAA surcharges begin at modified adjusted gross income above $109,000 for single filers and $218,000 for married couples filing jointly. Keeping income below these thresholds may help reduce healthcare costs.
• Satisfy required minimum distributions without increasing taxable income. Eligible taxpayers can use QCDs to fulfill all or part of their required minimum distributions (RMDs) while excluding the distributed amount from taxable income. Currently, RMDs generally begin at age 73 for individuals born before 1959 and age 75 for those born in 1960 or later.

This combination of charitable giving and income management can make QCDs a valuable planning tool for retirees who already support charitable organizations.

A Simple Example

Consider a retired couple that have reached the ages where they’re required to take distributions from their IRA Accounts. They’re currently receiving income from Social Security, investments, and retirement accounts.

Without planning, their income may exceed the threshold for the senior deduction.

If they make charitable gifts using traditional after-tax dollars, their adjusted gross income remains higher. As a result, they could miss the deduction and potentially pay more in taxes and Medicare premiums.

If they instead make the same gift utilizing a QCD from their IRA, their taxable income could potentially fall enough to qualify for the deduction and lower overall taxes.

Same charitable gift. Different tax outcome.

Bringing It Together

To use a QCD, you must:

• Be at least age 70½
• Transfer the funds directly from your IRA to the charity

The larger opportunity comes from coordinating your overall income strategy. Thoughtful planning can help align charitable giving, retirement distributions, investment income, and other tax considerations in a way that supports both your financial goals and your long-term tax efficiency.

The Bottom Line

This temporary senior deduction creates a valuable planning opportunity, but the window is limited.

With thoughtful coordination, you may be able to:

• Reduce taxable income
• Continue supporting charities you care about
• Increase overall tax efficiency during retirement

Small adjustments in how and when income is taken can make a meaningful difference.

KEB Wealth Advisors can help evaluate your income, charitable giving strategy, and broader financial plan to determine whether a QCD fits your goals.

This information is provided for general informational purposes only and should not be considered tax or financial advice. Each situation is unique, and you should consult with your financial advisor or tax professional regarding your specific circumstances.