$10,000 to Your Church, Two Ways, $2,000 Apart

You write a $10,000 check to your church in January 2026. Under the old rules, you deduct $10,000. Under the new law, only $8,000 counts.

The first $2,000 just vanished.

Congress put a floor under your giving. The One Big Beautiful Bill Act, signed July 4, 2025, added a new rule. Only the portion of your charitable gifts that exceeds 0.5% of your adjusted gross income counts as a deduction.

Half a percent sounds small. It is not small. The average American household gives about 2% of their income to charity each year. The floor eats a full quarter of that.

Here is what it looks like. You earn $400,000. You tithe $10,000 to your church. The floor is $2,000. That $2,000 in gifts buys you nothing on your tax return. Zero. Gone. Your deduction starts at $2,001.

I mean, the church still got the money. The IRS just stopped caring about the first chunk.

Now run the same $10,000 a different way.

You call your IRA custodian. You tell them to send $10,000 straight to your church. Not to you. To the church. This is a Qualified Charitable Distribution. A QCD.

The $10,000 leaves your IRA. It lands at your church. It never touches your tax return as income. It never hits your AGI.

No income means no AGI bump. No AGI bump means the floor has nothing to bite. The deduction math never starts. The whole 0.5% rule just sits there with nothing to do.

Sure.

That same $10,000 also counts toward your Required Minimum Distribution. That is the amount the IRS forces you to pull out of your IRA each year after age 73. One check. Two jobs.

The money never showed up as income. So you can still claim the full $32,200 standard deduction (married filing jointly) on everything else. A normal charitable deduction forces you to itemize. The QCD doesn't. You get the gift's tax benefit AND the standard deduction. Both.

Scale it up and the math holds. The accounting firm Elliott Davis ran a bigger version of the same play:

Right. Same tunnel. Bigger check.

Medicare checks your income two years back. If you are over the line, your premium jumps. This is called IRMAA. The income-related monthly adjustment amount.

One dollar above the threshold triggers the surcharge. Not a sliding scale. A cliff. The maximum hit is $5,844 a year on Part B alone. That is $487 a month.

The QCD keeps that $10,000 out of the income number Medicare looks at. Every dollar you route through a QCD instead of taking as income pulls you further from the cliff's edge.

Right?

The tunnel works. But the walls are made of paperwork. Miss a step and the whole thing collapses back into ordinary income.

The rules:

You must be 70½ or older.

The check must go directly from your IRA custodian to the charity. If it passes through your hands, even for a day, it is a distribution. Not a QCD.

Donor-advised funds do not qualify. Those are the pooled charity accounts where you park cash now and pick a recipient later. The IRS wants the money to land at a church, not sit in a waiting room. Private foundations don't count either.

You need a written letter from the charity. It must state the exact dollar amount. It must say you got nothing in return. No dinner. No raffle ticket. Nothing.

Your custodian reports the QCD on Form 1099-R with a new Code Y in Box 7. That code is how the IRS knows the money was clean.

Same $10,000. Same church. Same pew. One path loses $2,000 in deductions and risks a Medicare surcharge that can run almost $6,000 a year. The other path runs through your IRA custodian.

Congress put a floor under your giving. Your IRA has a tunnel underneath it. You're old enough. That's the whole trick.