By: Mark Santaniello, CRPC™, Financial Advisor at Wilson Wealth Advisory Group of Janney Montgomery Scott LLC

Over the past few years, I’ve had a lot of conversations with retirees here in Northeast Pennsylvania about charitable giving. Many people I meet have strong ties to their churches, local charities, or organizations that have been meaningful to their families for years.

One method people use to support these organizations is through a Qualified Charitable Distribution, or QCD. Currently, QCDs are designed to allow individuals age 70½ or older to transfer funds directly from an IRA to a qualified charity. These distributions can count toward required minimum distributions and are not included in taxable income when completed properly.

In my experience, where some confusion comes in right now is how these strategies fit within today’s tax environment. A big reason for that is the change in the tax code, specifically the much higher standard deduction. It is worth taking a step back and looking at how these strategies work today.

Years ago, charitable giving often paired with itemizing deductions, where the benefit was more visible on a tax return. Today, with the standard deduction significantly higher, and even higher for those over age 65, far fewer people itemize.

That is where things can start to feel a bit counterintuitive. If you are no longer itemizing, it can seem like charitable giving is not as tax efficient as it once was, especially if you are simply writing a check. However, in many cases, I have found that QCDs continue to be a useful planning tool because they allow individuals to receive a tax benefit without itemizing.

The difference is that the benefit shows up in a different way. Instead of appearing as a deduction, a QCD keeps the distribution from being included in taxable income in the first place.

Working with retirees in this area, I often see people balancing Social Security, IRA distributions, and sometimes pension income. What I have found is that managing income levels can have broader planning implications. In some cases, it can help manage how much of Social Security may be subject to tax, or whether someone falls into a higher Medicare premium bracket.

This is where a QCD can fit into the overall picture. Instead of taking a full required minimum distribution, paying taxes on it, and then donating separately, individuals can direct a portion of that distribution to a qualified charity. Because that amount is not included in taxable income when done correctly, it can be a more tax-efficient way to give, depending on the situation.

Of course, this is not a one-size-fits-all strategy. If charitable giving is not already part of your plan, it is not something to force. There are also specific rules and limits that need to be followed carefully.\

What I have found is that many people simply have not adjusted their approach to match today’s tax environment. The rules have changed, but habits have not always kept up.

The bigger picture is that retirement tax planning today is not just about deductions. It is also about managing when and how income shows up over time. In many cases, the focus is on strategies that help control taxable income, rather than adjusting it after the fact.

Even in today’s environment, QCDs remain one of the few tools that can help reduce taxable income without requiring itemization. It just takes a bit more awareness to understand where that benefit is coming from and how it fits into an overall plan.

(Janney Montgomery Scott LLC and its affiliates do not provide tax or legal advice. You should consult your tax advisor regarding your individual situation.)