Discover five charitable giving strategies to lower your retirement taxes — including QCDs, Donor-Advised Funds, and appreciated stock gifts. Align your generosity with smart tax planning.
Giving generously doesn’t have to mean paying more in taxes.
With the right strategy, retirees can support causes they care about while reducing their tax bill, managing RMDs, and creating a more efficient legacy for family and community.
Additionally, see our article on 7 ways to lower taxes in retirement.
A Cedar Falls couple once asked:
“We give every year — to our church, our alma mater, and the food bank — but is there a smarter way to do it?”
They’d always written checks from their checking account.
After reviewing their plan, we found several ways to make their giving more impactful and more tax-efficient — without changing the amount they donated.
The truth is, the IRS rewards generosity if you know how to give strategically.
Here are five proven ways to align your giving, your taxes, and your purpose in retirement.
At age 70½, you can give directly from your IRA to charity through a Qualified Charitable Distribution (QCD) — up to $108,000 per person in 2025 (indexed for inflation).
Why it matters
Example
A Cedar Falls retiree, age 74, gives $10,000 to her church each year. If she sends it directly from her IRA as a QCD, she meets part of her RMD and avoids adding that $10,000 to her taxable income — saving roughly $2,200 in federal tax.
Related Reading: RMD Planning: How to Avoid the Retirement Tax Bomb
In a high-income year — after a Roth conversion or asset sale — a DAF can let you bunch charitable gifts for maximum deduction now and grant them later.
Example: A couple converts $100 K to a Roth IRA and donates $30 K to a DAF, offsetting part of that income this year while spreading giving over time.
Donate shares with long-term gains directly to charity or a DAF.
You’ll get a deduction for the full market value and avoid capital-gains tax.
Example: Gift $50 K of ETF shares purchased for $20 K years ago — you save ≈ $4,500 in gains tax and still deduct the full $50 K.
Charities pay no tax on inherited IRAs, but heirs must withdraw them within 10 years and owe income tax.
Leave IRAs to charity and Roth or taxable accounts to family to maximize what everyone keeps.
Your charitable plan works best when coordinated with RMDs and Roth conversions.
This integrated approach builds the trifecta — lower taxes, higher impact, and more control.
Bill and Carol, both early-70s retirees in Cedar Falls, give ≈ $12 K per year to local causes.
After RMDs began, their advisor helped them:
Results
They didn’t give less — they just gave more intentionally.
Qualified Charitable Distributions (QCDs)
Once you reach age 70½, you can send money directly from your IRA to charity. Starting at age 73 (or 75 depending on birth year), these gifts can also satisfy your Required Minimum Distributions — without increasing your taxable income. This approach lets you support causes you care about while lowering your tax bill.
Donor-Advised Funds (DAFs)
A Donor-Advised Fund is a powerful tool during higher-income or peak earning years. You receive an immediate tax deduction for contributions, but you can distribute grants to charities over time. This is especially valuable in years with large bonuses, business sales, or Roth conversions.
Donating Appreciated Investments
If you’ve held an investment for at least a year and it has grown in value, donating it directly instead of selling allows you to avoid capital gains tax and still receive a charitable deduction. This strategy works in any year you have embedded gains in your portfolio — a great way to give with the IRS’s money, not yours.
Naming a Charity as an IRA Beneficiary
During your estate planning process, consider listing a charity as a beneficiary on your retirement accounts. Qualified charitable beneficiaries can receive these assets income-tax-free, making this one of the most efficient ways to leave a legacy gift.
Combining Charitable Giving With Roth Conversions
Between roughly ages 60 and 75, many households enter a unique planning window — lower taxable income before RMDs begin. It's often the perfect time to do Roth conversions and use charitable giving to help offset the tax impact, allowing you to support your favorite causes while accelerating long-term tax savings.
See a more in depth article on 5 Charitable Giving Strategies.
Purpose and planning belong together.
When you structure your giving intentionally, you can reduce taxes, simplify your finances, and amplify your impact.
At Ignite Financial, we help retirees design purpose-driven tax strategies that align money with meaning — so every dollar does good for you, your family, and your community.
If you already give regularly, there’s likely a more tax-efficient way to do it.
Let’s make your generosity work as hard as you do.
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A QCD allows you to donate money directly from your IRA to a qualified charity once you turn age 70½.
You can give up to $108,000 per person in 2025 (indexed for inflation).
The gift counts toward your Required Minimum Distribution (RMD) once you reach age 73 or 75 and doesn’t show up as taxable income—helping lower both taxes and potential Medicare premiums.
A DAF is like a charitable investment account:
Often yes. Donating long-term appreciated investments directly to charity lets you:
Yes. You can begin QCDs at age 70½, even before RMDs begin at 73 or 75.
Those early QCDs don’t offset an RMD yet, but they reduce your IRA balance—helping lower future RMDs and taxable income.
It depends on your goals.
Heirs must withdraw inherited IRAs within 10 years and pay income tax on them.
Charities, on the other hand, pay no tax when receiving IRA assets.
Many retirees leave IRAs to charity and Roth or taxable assets to family for the most tax-efficient legacy.
Absolutely. Some retirees pair Roth conversions with DAF contributions in the same year—using the charitable deduction to offset part of the conversion’s tax impact.
This blended approach can reduce today’s taxes and create tax-free income later.
Most 501(c)(3) public charities—religious, educational, or community-based organizations—qualify.
QCDs cannot go to donor-advised funds or private foundations, but you can still use other giving methods for those.