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Charitable Gift Annuities: How They Work, How They're Taxed, CGA vs CRT

Josh Rendler, CFP®

Creator of Motion Retirement

Updated 2026-10-12 · Tax year 2026 · Figures checked October 10, 2026 · How this is checked

How does a charitable gift annuity work?

You give a charity cash or stock. In return, the charity promises to pay you a fixed amount for life. Charities usually write it for one life or two, often you and your spouse. This is called a gift annuity (a deal where you give a charity money and it pays you a set amount for life). The tax law treats it as part gift and part purchase. If you itemize, you can generally deduct the gift part. A deduction lowers your taxable income (the part of your income that tax rates are actually charged on), not your AGI (your total income minus a few set subtractions, the number many tax rules start from). Each payment is taxed in pieces.

  • It's part gift and part purchase of lifetime payments from one charity. The payment is set in the contract and normally never rises.
  • Your deduction is what you give minus the IRS value of the payments you get back. It generally only helps if you itemize.
  • Each payment can have three parts: your own money back tax-free, capital gain if you gave stock that grew, and ordinary income.
  • The 0.5% floor (a 2026 rule: the first sliver of your charity gifts, half a percent of income, is not deductible) can shrink an itemized deduction. The new deduction for people who don't itemize leaves out gifts of property (anything you own other than cash, such as stock or a fund, not just a house) and old carryovers (the part of a gift too big to deduct this year, saved for up to five later years). Don't count on that one here.
  • From 70½, a one-time QCD (money sent straight from your IRA to a charity at 70½ or older, not taxed as income, up to a yearly limit) of up to $55,000 can fund a gift annuity paid for only by QCDs, inside your yearly QCD limit. Payments must be fixed, 5% or more, start within one year, and go only to you or your spouse. The right to them can't be given to anyone else.
Jump to a question

A gift annuity is often the simplest way to give and get income back. There’s no trust to write. There’s no yearly trust tax return. You sign a short contract, give cash or stock, and get a fixed check for life.

The trade-off is that your income depends on one charity. It has to be able to keep paying.

For a bigger, more flexible tool, see charitable remainder trusts. Are you 70½ or older and want to set up a brand-new gift annuity funded only with QCDs sent straight from your IRA? See the one-time QCD (a one-time IRA gift to a charity trust or annuity that pays you back) to a gift annuity.

What is a charitable gift annuity?

It’s a contract. You give cash or stock to a charity. The charity agrees to pay you a fixed amount every year for the rest of your life.

  • You give. You move cash or stock to the charity.
  • The charity pays you. It pays a fixed amount for your life. Charities write them for one life or two, usually you and your spouse, because of a condition they follow (below).1
  • You may get part of a deduction. The gift part is generally deductible. Itemized, so it lowers taxable income but not AGI.2345
  • The charity keeps the rest. When payments stop, the charity keeps what’s left.

How does a charitable gift annuity work?

You give money or stock. The charity promises fixed pay for life. The gap between what you gave and what that promise is worth is your gift.

A gift annuity is part sale and part gift.6 Your gift is what you give minus today’s value of the payments you’ll get.6 What you paid is split between the two parts only when you can deduct the gift part.7 A deduction you have to carry forward to a later year still counts.7 Say only you or your survivor can get the payments, and you can deduct the gift part.67 Then any gain is reported a bit each year, out of the part of each payment that returns what you paid.6 That spreading also applies only if the annuity can’t be passed to anyone but the charity that issued it.6

Steps, in order

  1. Pick who gets paid. Usually you, or you and your spouse.
  2. Get the charity’s rate and contract. The rate depends on your age. Older ages usually come with higher rates, but each charity sets its own.
  3. Move the money or stock. Cash and stock that trades on a market are most common.
  4. Keep the charity’s receipt and its deduction number for your tax return.
  5. Get paid. Payments can start right away or on a later date in the contract. They normally don’t change with markets or inflation.
  6. Report the payments. The charity sends a Form 1099-R (the tax form that reports money paid out of an IRA or an annuity) each year.8
  7. At the last person’s death, payments stop. The charity keeps what’s left.

Can payments start later, or cover two people?

Yes, for a regular gift annuity. The contract can start payments on a later date. People call that a deferred gift annuity. The start date changes the rate, so ask the charity to quote it in writing.

It can also pay two people, such as you and your spouse. Payments then go on until the second one dies. Both ages set the rate, so get a written quote for the two of you.

A gift annuity funded from an IRA has stricter rules. They reach down to line 4c (the lines on your tax return where IRA withdrawals and QCDs are reported) of your Form 1040.

Once in your life, a QCD can fund a charitable gift annuity or a charitable remainder trust.9 The limit is $55,0009 in 2026, and it counts toward your yearly QCD limit.9 It was $50,000 in 2023 and is adjusted for inflation after that.10 Only QCDs can fund it, and only you, your spouse or both can get the payments.9 The right to those payments can’t be passed to anyone else.11 A gift annuity must start fixed payments of 5% or more within one year.9 The payments are taxed as ordinary income.9 On line 4c of Form 1040, you check box 3, enter “SIE,” and attach a statement.11

See the one-time QCD page.

What are CGA rates, and who sets them?

For a regular gift annuity, each charity sets its own rates. Federal law doesn’t publish rates for them, and it doesn’t cap your gift. An IRA-funded one is different. Once in a lifetime, up to $55,000 in 2026, inside the yearly QCD limit.91011

But one rule shapes what charities will offer. The charity’s promise to pay you can count as borrowed money for the charity’s own tax. It stays out of that only if a short list of conditions is met:

  • The annuity must be the only thing you get back.
  • Its value must be less than 90% of what you give.
  • It must run over one life, or two lives, of people living when it starts.
  • The contract can’t promise a smallest or largest amount of payments.
  • The payments can’t be tied to the income the gift earns.1

By my reading, that’s why charities keep the annuity’s value under 90% of the gift. Their advisers check the other conditions.

Some charities follow suggested rates published by the American Council on Gift Annuities. That’s a private industry group, not a federal body.

This page doesn’t list rates. What counts is the charity’s current rate at your age, in writing and dated.

How much does a gift annuity pay?

You multiply your gift by the charity’s rate. A $100,000 gift at a 7% rate pays $7,000 a year. That’s about $583 a month. The 7% here is only an example. Your rate depends on your age and the charity.

Is there a minimum?

There’s no minimum in federal law. Each charity sets its own smallest gift.

How much is the tax deduction for a charitable gift annuity?

You deduct the gift part, not the whole amount you give. The value of the payments comes from IRS life tables and an interest rate the IRS sets each month.12 The charity, or its software, usually figures this for you.

Three things drive the deduction:

  • Your age. At the same payout rate, older people have fewer expected years of pay. So the payments are worth less, and the gift part is bigger. But older ages usually come with higher rates, which pushes the other way.
  • The payout rate. A higher rate makes the payments worth more and the gift smaller.
  • The IRS rate for the month. That’s the 7520 rate (an interest rate the IRS sets each month, used to value trust and annuity gifts to charity).12

The normal limits apply

The deduction generally only helps if you itemize. Itemized, so it lowers taxable income but not AGI.2345

Most charities are a public charity (a charity like a church, school or hospital that gets the best tax treatment for gifts). The wordings below treat a supporting organization (a charity set up to help one or more specific public charities) and most private foundations (a charity funded mostly by one person, family or company, not a public charity) differently.

From 2026, if you don’t itemize, you can deduct up to $1,00013 of cash gifts, or $2,00013 on a joint return.13 The cash must go to a public charity, or one of a few special foundations, not a donor-advised fund or a supporting organization.1415 Gifts of stock or other property don’t count, and neither do carryovers from earlier years.14 It lowers your taxable income, but not your AGI.16

By my reading, that rule is written for plain outright cash gifts. Whether a gift annuity’s gift part counts there is unsettled, so don’t count on it if you don’t itemize.

If you itemize instead, your deduction is capped by your AGI. The yearly caps are set out in full on the deduction limits page.

Gifts over a yearly cap can be deducted in the next five years, but not after that.17 In those years, they generally keep the same cap.17 Within each kind of gift, new gifts are used before carryovers, and older carryovers before newer ones.18 Qualified conservation gifts get 15 years instead of five.19

From 2026, if you itemize, your gifts count only above 0.5% of your AGI.20 By my reading, the floor comes off after the yearly AGI caps.21 It comes off in a set order, starting with gifts under the 20% cap and ending with cash to public charities.22

Gifts lost to the 0.5% floor carry over only from a year when gifts went over a yearly AGI cap.23 Even then, only the floor amount tied to the kind of gift that went over joins the carryover.24 Otherwise, the amount lost to the floor is gone.23

See deduction limits and 2026 changes.

How are charitable gift annuity payments taxed?

For a regular gift annuity, each payment is generally split into up to three parts:

  1. Your own money back, tax-free.
  2. Capital gain, if you gave stock that grew.
  3. Ordinary income, for the rest.

Here’s how the split works. Your cost is the value of the payments when you start. Divide that by the total pay you’re expected to get. That percent of each payment is not taxed as ordinary income.25 If you gave stock that grew, part of it is capital gain. The rest is your own money back, tax-free.

One funded from an IRA works differently. Every payment there is ordinary income, so this section doesn’t apply to it. Once in a lifetime, up to $55,000 in 2026, inside the yearly QCD limit.91011

If you give stock that grew

Since part of the deal is a sale, part of your gain is taxed. The bargain-sale rules above set how much, and when you report it.

If no deduction is allowable at all for the gift part, your whole cost offsets the sale part instead. So the taxed gain is smaller. A deduction you have to carry forward still counts as allowable, so the cost is still split.7

Where the gain is spread, it’s spread over the expected years of pay under the contract. For a two-life annuity, both lives set that number of years. The payments must go only to you, or to you and a survivor named in the contract.26 Spreading is required, not a choice. The gain each year can’t be more than the part of the payment that isn’t ordinary income.6

Worked example · tax year 2026Funding a gift annuity with stock that grew
Assumptions
  • A made-up giver gives stock worth $100,000 that cost $20,000, held more than a year.
  • The charity pays $6,000 a year for the giver's life. The payments can't be transferred, and the giver is the only one paid.
  • Assume the IRS-table value of the payments is $55,000 and the giver's expected years of pay is 12. These stand in for the real figures the charity provides.
  • The giver itemizes, so a deduction is allowed for the gift part.
  • The $45,000 is the gift part of what you gave, not this year's deduction. The 0.5% floor and the 30%-of-AGI cap on stock gifts still apply.
  • Amounts are rounded to whole dollars at each step.
  • This example figures only the gift deduction and how the payments are taxed, not taxable income.
Step Calculation Result
Charitable gift $100,000 − $55,000 $45,000
Cost assigned to the sale part $20,000 × $55,000 ÷ $100,000 $11,000
Gain on the sale part $55,000 − $11,000 $44,000
Expected total pay $6,000 × 12 $72,000
Percent not taxed as ordinary income $55,000 ÷ $72,000 76.39%
Part not taxed as ordinary income (split below) $6,000 × 76.39% $4,583
Ordinary income per payment $6,000 − $4,583 $1,417
Capital gain per payment $44,000 ÷ 12 $3,667
Your cost back, tax-free, per payment $4,583 − $3,667 $916

Each $6,000 payment is $1,417 ordinary income, $3,667 capital gain, and $916 tax-free.

If you give cash, there’s no gain. The tax-free part of each payment is all your money coming back. The rest is ordinary income.

Do I have to report a gift annuity on my taxes?

Yes. The charity sends a Form 1099-R each year.8 It shows the total paid that year. It also shows any part taxed as capital gain.

Is a gift annuity funded from an IRA taxed the same way?

No. With the one-time IRA gift, every payment is ordinary income. And there’s no deduction. Left out of income before AGI, so it can't also be deducted.2728

For CPAs and attorneysBargain-sale and § 72 mechanics

The gift annuity is a bargain sale under Treas. Reg. § 1.1011-2; basis is allocated to the annuity portion by the ratio of the annuity’s present value to the property’s value, and for an annuity payable only to the donor (or the donor and a designated survivor) that is nonassignable, or assignable only to the issuing charity, the gain is reported ratably over the period measured by the expected return multiple, but only out of the § 72 return-of-investment portion of each payment.6 The regulation’s own example transfers stock worth $100,000 against annuity payments valued at $59,755, leaving a $40,245 contribution; it is set in 1970 and uses the tables and rate of that time, so it shows the method, not current figures.629 The exclusion ratio is investment in the contract over expected return under § 72(b), and the amount excluded from each payment cannot exceed the unrecovered investment.25 The issuing charity reports capital gain in box 3 of Form 1099-R.8

What are the drawbacks of a charitable gift annuity?

The main ones: payments are only as safe as the charity, they normally never rise, and you can’t undo it.

  • You depend on one charity. The payments are that charity’s promise, not an insured one. So the charity’s size and reserves are worth a look first. States regulate gift annuities in different ways. This site covers federal law only.
  • No inflation protection. Charities write these with a set payment that doesn’t rise. Check the schedule in your written quote.
  • Permanent. You can’t get the money back.
  • Less pay than an insurance company annuity. Part of what you give is a gift, so the check is smaller.
  • Your heirs get nothing from it. After the last person paid dies, what’s left goes to the charity. Only a second person named in the contract keeps getting payments. The conditions charities follow fit one life or two, so they generally write for at most two people.1

Is a charitable gift annuity a good idea?

As an investment alone, it usually pays less than an insurance company annuity. That’s because part of what you give is a gift.

The way I think about it, a gift annuity is a giving decision with income attached. For someone who planned to leave the money to that charity anyway, it can mean three things. Giving now. A deduction now, if they itemize. And fixed income for life.

What is the difference between a charitable gift annuity and a charitable remainder trust?

A gift annuity is a simple contract with one charity that pays a fixed amount. A CRT (a trust that pays you or people you name for life or a set term, then gives what is left to charity) is its own trust, run by a trustee. It gives more choices and costs more. The two kinds are a CRAT (a charity trust that pays you the same dollar amount every year) and a CRUT (a charity trust that pays you a set percent of its value, so payments go up and down).

Feature Gift annuity Charitable remainder trust
What it is A contract with one charity Its own trust, run by a trustee
Who backs the payments That charity The trust’s own assets
The payments Fixed for life, set in the contract CRAT: a fixed amount; CRUT: a set percent of each year's value.30313233
Which charity gets what’s left Only the one that issued the contract One or more you name
Gain on stock that grew Partly taxed, often spread over your expected years No tax at the trust, except business-type income, which is taxed at 100%.343536
Setup and yearly cost Usually none to you Legal, trustee, investing and filing costs
Smallest gift Set by each charity Usually larger, because of fixed costs
One-time QCD from an IRA Once in a lifetime, up to $55,000 in 2026, inside the yearly QCD limit.91011 Once in a lifetime, up to $55,000 in 2026, inside the yearly QCD limit.91011

A CRAT pays a fixed amount each year, set at 5% to 50% of what went in.30 A CRUT pays a set 5% to 50% of the trust’s value, measured again each year.31 Either pays at least once a year.30 It can run for a set term of up to 20 years, or for the lives of the people paid.3032 Those people must be alive when the trust starts.32 The charity’s share must be worth at least 10% of what goes in.33

A charitable remainder trust pays no income tax, so it can sell what you gave without tax at that moment.34 Business-type income inside it is taxed at 100%.34 That includes part of the income from an asset with a loan on it, like a mortgaged building.36 The trust can’t be undone, and it files Form 5227 every year.35

Common mistakes

  • Comparing the rate to a bond yield. Part of each payment is your own money coming back.
  • Putting too much with one charity. Some people spread large gift annuities across more than one strong charity.
  • Forgetting the yearly limits on the deduction. Big gifts of stock may need the carryforward. Carries forward up to five years, under the same cap.171918
  • Thinking an IRA-funded gift annuity is taxed like a regular one. Those payments are all ordinary income. Once in a lifetime, up to $55,000 in 2026, inside the yearly QCD limit.91011

Sources (36)

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  1. An issuing charity's obligation to pay an annuity is excluded from acquisition indebtedness only if it meets every condition of section 514(c)(5): it is the sole consideration issued in exchange for the property and the annuity's value at the exchange is less than 90 percent of the value of the property received; it is payable over the life of one individual in being when issued, or the lives of two such individuals; and the contract neither guarantees a minimum nor specifies a maximum amount of payments, and does not adjust payments by reference to income from the transferred or other property. This is a condition on the charity's own unrelated-business-income tax treatment, not a federal cap on what a donor may give or receive.

    • 26 U.S.C. § 514 (LII), § 514(c)(5)For purposes of this section, the term "acquisition indebtedness" does not include an obligation to pay an annuity which— Checked 2026-10-11.
    • 26 U.S.C. § 514 (LII), § 514(c)(5)(A)is the sole consideration (other than a mortgage to which paragraph (2)(B) applies) issued in exchange for property if, at the time of the exchange, the value of the annuity is less than 90 percent of the value of the property received in the exchange Checked 2026-10-11.
    • 26 U.S.C. § 514 (LII), § 514(c)(5)(B)is payable over the life of one individual in being at the time the annuity is issued, or over the lives of two individuals in being at such time, and Checked 2026-10-11.
    • 26 U.S.C. § 514 (LII), § 514(c)(5)(C)is payable under a contract which— (i) does not guarantee a minimum amount of payments or specify a maximum amount of payments, and (ii) does not provide for any adjustment of the amount of the annuity payments by reference to the income received from the transferred property or any other property. Checked 2026-10-11.

  2. To deduct charitable contributions in the ordinary way, an individual must itemize on Schedule A.

    • IRS Publication 526 (2025), DeductionsGenerally, to deduct a charitable contribution, you must itemize deductions on Schedule A (Form 1040). Checked 2026-10-09.

  3. No itemized deduction is allowed unless the individual elects to itemize for the year; the taxpayer takes either itemized deductions or the standard deduction.

    • 26 U.S.C. § 63 (LII), § 63(e)(1)Unless an individual makes an election under this subsection for the taxable year, no itemized deduction shall be allowed for the taxable year. Checked 2026-10-10.

  4. AGI is gross income minus the deductions listed in § 62(a). Itemized deductions are, by definition, the deductions other than those allowable in arriving at AGI, and taxable income is gross income minus the deductions allowed. So an itemized charitable deduction (including one for a gift to a donor-advised fund or of appreciated stock) reduces taxable income but not AGI, and therefore not MAGI measures built on AGI, such as the IRMAA MAGI (AGI plus tax-exempt interest).

    • 26 U.S.C. § 62 (LII), § 62(a)For purposes of this subtitle, the term “adjusted gross income” means, in the case of an individual, gross income minus the following deductions: Checked 2026-10-10.
    • 26 U.S.C. § 63 (LII), § 63(d)For purposes of this subtitle, the term “itemized deductions” means the deductions allowable under this chapter other than— (1) the deductions allowable in arriving at adjusted gross income, and (2) any deduction referred to in any paragraph of subsection (b). Checked 2026-10-10.
    • 26 U.S.C. § 63 (LII), § 63(a)Except as provided in subsection (b), for purposes of this subtitle, the term “taxable income” means gross income minus the deductions allowed by this chapter (other than the standard deduction). Checked 2026-10-10.

  5. Itemized deductions (including the ordinary charitable deduction) are, by definition, deductions other than those allowable in arriving at adjusted gross income, so they reduce taxable income but not AGI.

    • 26 U.S.C. § 63 (LII), § 63(d)the term “ itemized deductions ” means the deductions allowable under this chapter other than— (1) the deductions allowable in arriving at adjusted gross income Checked 2026-10-10.

  6. A charitable gift annuity is treated as a bargain sale: the gift portion (property value minus the present value of the annuity) is the charitable contribution; basis is allocated to the annuity portion, and for a nonassignable annuity to the donor (and survivor) the resulting gain can be reported ratably over the expected payout period; each payment is split under § 72 into a tax-free return of investment, capital gain, and ordinary annuity income.

    • 26 CFR § 1.1011-2 (LII), § 1.1011-2(a)(4)(ii)If in such case the annuity received in exchange for the property is nonassignable, or is assignable but only to the charitable organization to which the property is sold or exchanged Checked 2026-10-09.
    • 26 CFR § 1.1011-2 (LII), § 1.1011-2(c) Example 8(b)Thus, A makes a charitable contribution to the church of $40,245 ($100,000 −$59,755). Checked 2026-10-09.
    • 26 CFR § 1.1011-2 (LII), § 1.1011-2(c) Example 8(c)Such gain is to be reported by A ratably over the period of years measured by the expected return multiple under the contract , but only from that portion of the annual payments which is a return of his investment in the contract under section 72 of the Code . Checked 2026-10-09.
    • 26 CFR § 1.1011-2 (LII), § 1.1011-2(c) Example 8(d)Ordinary annuity income ($5,000−$3,985) $1,015.00 Checked 2026-10-09.

  7. In a bargain sale to charity, the donor's adjusted basis is apportioned between the sale portion and the gift portion only if a charitable contributions deduction is allowable under section 170 by reason of the sale or exchange; the apportioned basis is the share of total basis that the amount realized bears to the property's fair market value. If no deduction is allowable, no apportionment applies and the full basis offsets the amount realized, so less gain is recognized.

    • 26 CFR § 1.1011-2 (LII), § 1.1011-2(a)(1)If for the taxable year a charitable contributions deduction is allowable under section 170 by reason of a sale or exchange of property, the taxpayer's adjusted basis of such property for purposes of determining gain from such sale or exchange must be computed as provided in section 1011(b) and paragraph (b) Checked 2026-10-11.
    • 26 CFR § 1.1011-2 (LII), § 1.1011-2(b)the adjusted basis of the property which is sold or exchanged shall be that portion of the adjusted basis of the entire property which bears the same ratio to the adjusted basis as the amount realized bears to the fair market value of the entire property Checked 2026-10-11.
    • 26 CFR § 1.1011-2 (LII), § 1.1011-2(a)(2)If in the taxable year there is a sale or exchange of property which gives rise to a charitable contribution which is carried over under section 170(b)(1)(D)(ii) or section 170(d) to a subsequent taxable year or is postponed under section 170(a)(3) to a subsequent taxable year, section 1011(b) and paragraph (b) of this section must be applied for purposes of apportioning the adjusted basis of the property for the year of the sale or exchange, whether or not such contribution is allowable as a deduction under section 170 in such subsequent year. Checked 2026-10-11.

  8. Distributions from a charitable gift annuity funded with cash or capital gain property are reported on Form 1099-R: the total distributed in the year in box 1, and any amount taxable as capital gain in box 3.

    • Instructions for Forms 1099-R and 5498 (2026), Specific Instructions, Charitable gift annuitiesIf cash or capital gain property is donated in exchange for a charitable gift annuity, report distributions from the annuity on Form 1099-R. Checked 2026-10-10.
    • Instructions for Forms 1099-R and 5498 (2026), Box 3, Charitable gift annuitiesReport in box 3 any amount from a charitable gift annuity that is taxable as a capital gain. Report in box 1 the total amount distributed during the year. Checked 2026-10-10.

  9. Once in a lifetime, a QCD may fund a charitable remainder annuity trust, charitable remainder unitrust, or charitable gift annuity, if the entity is funded only by QCDs, only the owner and/or spouse hold the (nonassignable) income interest, and a CGA starts fixed payments of 5% or more within 1 year. The limit is $53,000 (2024), $54,000 (2025), $55,000 (2026) and counts within the annual QCD limit. Payments received are ordinary income. A statement must be attached to the return.

    • 26 U.S.C. § 408 (LII), § 408(d)(8)(F)(i)(I)an election is not in effect under this subparagraph for a preceding taxable year Checked 2026-10-09.
    • 26 U.S.C. § 408 (LII), § 408(d)(8)(F)(ii)(III)commences fixed payments of 5 percent or greater not later than 1 year from the date of funding. Checked 2026-10-09.
    • 26 U.S.C. § 408 (LII), § 408(d)(8)(F)(iv)no person holds an income interest in the split-interest entity other than the individual for whose benefit such account is maintained, the spouse of such individual, or both Checked 2026-10-09.
    • 26 U.S.C. § 408 (LII), § 408(d)(8)(F)(v)(I)shall be treated as ordinary income in the hands of the beneficiary Checked 2026-10-09.
    • IRS Notice 2023-75 (2024 limits), Section 408(d)(8)(F) paragraphis increased from $50,000 to $53,000. Checked 2026-10-09.
    • IRS Notice 2024-80 (2025 limits), Section 408(d)(8)(F) paragraphis increased from $53,000 to $54,000. Checked 2026-10-09.
    • IRS Notice 2025-67 (2026 limits), Section 408(d)(8)(F) paragraphfrom $54,000 to $55,000. Checked 2026-10-09.
    • Instructions for Form 1040 (2025), Line 4a/4b, Exception 3This includes any amount (up to $54,000) of a one-time QCD to a split-interest entity (SIE). Checked 2026-10-09.

  10. The statute sets the one-time split-interest QCD amount at $50,000; the provision (SECURE 2.0 § 307) applies to distributions in taxable years beginning after December 29, 2022, so $50,000 was the 2023 amount. It is inflation-indexed for years after 2023 ($53,000 for 2024, $54,000 for 2025, $55,000 for 2026).

    • 26 U.S.C. § 408 (LII), § 408(d)(8)(F)(i)(II)the aggregate amount of distributions of the taxpayer with respect to which an election under this subparagraph is made does not exceed $50,000 Checked 2026-10-10.
    • 26 U.S.C. § 408 (LII), Effective date note, Pub. L. 117-328, div. T, § 307(c)shall apply to distributions made in taxable years beginning after the date of the enactment of this Act Checked 2026-10-10.
    • 26 U.S.C. § 408 (LII), § 408(d)(8)(G)(i)In the case of any taxable year beginning after 2023, each of the dollar amounts in subparagraphs (A) and (F) shall be increased Checked 2026-10-10.

  11. To report the one-time split-interest QCD, check box 3 on Form 1040 line 4c, enter "SIE", and attach a statement covering no prior election, that only the owner and/or spouse hold the income interest, that it is nonassignable, and the amount.

  12. For federal tax purposes, the value of an annuity (and of an interest for life or a term of years, or a remainder interest) is determined under tables prescribed by the Secretary, using an interest rate rounded to the nearest 2/10ths of 1 percent and equal to 120 percent of the federal midterm rate under section 1274(d)(1) for the month in which the valuation date falls. That rate is commonly called the section 7520 rate. It is the rate and table set that fixes the value of the annuity a charitable gift annuity promises, and so the size of the gift portion.

  13. Beginning in 2026, taxpayers who do not itemize may deduct up to $1,000 ($2,000 joint) of cash gifts to § 170(b)(1)(A) public charities, excluding gifts to supporting organizations and donor-advised funds.

    • 26 U.S.C. § 170 (LII), § 170(p)the deduction under this section shall be equal to the deduction, not in excess of 1,000 ($2,000 in the case of a joint return) Checked 2026-10-09.
    • 26 U.S.C. § 170 (LII), Amendment note, P.L. 119-21 § 70424(a)substituted “$1,000 ($2,000” for “$300 ($600” Checked 2026-10-09.
    • 26 U.S.C. § 170 (LII), Effective date note, P.L. 119-21 § 70424(b)shall apply to taxable years beginning after December 31, 2025 . Checked 2026-10-09.

  14. The non-itemizer deduction counts only cash contributions made during the year to § 170(b)(1)(A) organizations, not to § 509(a)(3) supporting organizations or for a new or existing donor-advised fund, and is computed without carryovers and without the 0.5% floor.

    • 26 U.S.C. § 170 (LII), § 170(p)which would be determined under this section if the only charitable contributions taken into account in determining such deduction were contributions made in cash during such taxable year (determined without regard to subsections (b)(1)(G)(ii), (b)(1)(I), and (d)(1)) Checked 2026-10-09.
    • 26 U.S.C. § 170 (LII), § 170(p)(1)-(2)to an organization described in section 509(a)(3), or (2) for the establishment of a new, or maintenance of an existing, donor advised fund Checked 2026-10-09.

  15. The § 170(p) deduction for non-itemizers (cash gifts, beginning 2026) does not apply to contributions for the establishment or maintenance of a donor-advised fund, or to § 509(a)(3) supporting organizations.

    • 26 U.S.C. § 170 (LII), § 170(p)(2)(2) for the establishment of a new, or maintenance of an existing, donor advised fund (as defined in section 4966(d)(2) ). Checked 2026-10-09.

  16. For a taxpayer who does not itemize, taxable income is AGI minus the standard deduction and other listed deductions, including the § 170(p) non-itemizer charitable deduction. That deduction therefore reduces taxable income but not AGI.

    • 26 U.S.C. § 63 (LII), § 63(b)the term “ taxable income ” means adjusted gross income , minus— (1) the standard deduction , (2) the deduction for personal exemptions provided in section 151, (3) any deduction provided in section 199A, (4) the deduction provided in section 170(p), Checked 2026-10-09.

  17. Contributions above the AGI limits carry over for up to 5 years (15 for qualified conservation contributions) and generally keep the same percentage limit in the carryover year.

    • IRS Publication 526 (2025), Carryoversyou may be able to deduct the excess in each of the next 5 years until it is used up, but not beyond that time. Checked 2026-10-09.
    • IRS Publication 526 (2025), CarryoversGenerally, contributions you carry over are subject to the same percentage limits in the year to which they are carried as they were in the year of the contribution. Checked 2026-10-09.

  18. Within each category, current-year contributions are deducted before carryovers, and older carryovers are used before newer ones.

    • IRS Publication 526 (2025), CarryoversFor each category of contributions, you deduct carryover contributions only after deducting all allowable contributions in that category for the current year. If you have carryovers from 2 or more prior years, use the carryover from the earlier year first. Checked 2026-10-09.

  19. Qualified conservation contributions over their AGI limit carry over for 15 succeeding years, not 5.

    • 26 U.S.C. § 170(b)(1)(E)(ii), § 170(b)(1)(E)(ii)such excess shall be treated (in a manner consistent with the rules of subsection (d)(1)) as a charitable contribution to which clause (i) applies in each of the 15 succeeding years in order of time. Checked 2026-10-10.

  20. Starting in 2026, itemized charitable deductions are allowed only to the extent total contributions exceed 0.5% of the taxpayer's contribution base (AGI). Disallowed amounts may carry forward only in limited circumstances (new § 170(d)(1)(C) — not reviewed).

    • 26 U.S.C. § 170 (LII), § 170(b)(1)(I)shall be allowed only to the extent that the aggregate of such contributions exceeds 0.5 percent of the taxpayer’s contribution base Checked 2026-10-09.
    • 26 U.S.C. § 170 (LII), Effective date note, P.L. 119-21 § 70425(c)shall apply to taxable years beginning after December 31, 2025 . Checked 2026-10-09.

  21. The 0.5% floor applies to charitable contributions 'otherwise allowable (without regard to this subparagraph)' as a deduction, i.e., read here as the amount allowable after the percentage-of-AGI limits. This ordering is the reviewer's reading of the statute text; no IRS worked example was located.

    • 26 U.S.C. § 170 (LII), § 170(b)(1)(I)Any charitable contribution otherwise allowable (without regard to this subparagraph) as a deduction under this section shall be allowed only to the extent that the aggregate of such contributions exceeds 0.5 percent of the taxpayer’s contribution base for the taxable year. Checked 2026-10-09.

  22. The 0.5% floor is applied first against 20%-limit capital gain gifts, then 30% capital gain gifts, then 30%-limit (other) gifts, then conservation gifts, then 50% gifts, and last against 60% cash gifts.

    • 26 U.S.C. § 170 (LII), § 170(b)(1)(I)(i)first, by taking into account charitable contributions to which subparagraph (D) applies to the extent thereof, Checked 2026-10-09.
    • 26 U.S.C. § 170 (LII), § 170(b)(1)(I)(vi)sixth, by taking into account charitable contributions to which subparagraph (G) applies to the extent thereof. Checked 2026-10-09.

  23. An amount disallowed by the 0.5% floor carries forward only from a year in which a percentage limit is also exceeded (so that an excess is carried forward anyway); in that case the floor-disallowed amount is added to the carryover. In a year where the AGI limits are not exceeded, the floor-disallowed amount is simply lost.

    • 26 U.S.C. § 170 (LII), § 170(d)(1)(C), headingContributions disallowed by 0.5-percent floor carried forward only from years in which limitation is exceeded Checked 2026-10-09.
    • 26 U.S.C. § 170 (LII), § 170(d)(1)(C)(i)In the case of any taxable year from which an excess is carried forward (determined without regard to this subparagraph) under any carryover rule , the applicable carryover rule shall be applied by increasing the excess Checked 2026-10-09.

  24. Under § 170(d)(1)(C), in a year from which an excess is carried forward under a carryover rule (determined without regard to the floor), that carryover is increased by the amount attributable to the contributions to which that rule applies that was disallowed by the 0.5% floor. Floor-disallowed amounts attributable to a category with no excess are not added.

    • 26 U.S.C. § 170 (LII), § 170(d)(1)(C)(i)In the case of any taxable year from which an excess is carried forward (determined without regard to this subparagraph) under any carryover rule , the applicable carryover rule shall be applied by increasing the excess determined under such applicable carryover rule for the contribution year (before the application of subparagraph (B)) by the amount attributable to the charitable contributions to which such rule applies which is not allowed as a deduction for the contribution year by reason of subsection (b)(1)(I). Checked 2026-10-09.

  25. Under § 72(b), the part of each annuity payment excluded from income is the ratio of the investment in the contract to the expected return; the excluded amount cannot exceed the unrecovered investment, so once the investment is recovered later payments are fully includible.

    • 26 U.S.C. § 72 (LII), § 72(b)(1)which bears the same ratio to such amount as the investment in the contract (as of the annuity starting date) bears to the expected return under the contract (as of such date) Checked 2026-10-09.
    • 26 U.S.C. § 72 (LII), § 72(b)(2)shall not exceed the unrecovered investment in the contract immediately before the receipt of such amount Checked 2026-10-09.

  26. The ratable-gain reporting rule for a bargain-sale gift annuity applies only if the annuity is nonassignable (or assignable only to the issuing charity) and the transferor is the only annuitant, or the transferor and a designated survivor annuitant or annuitants are the only annuitants. The gain is then reported ratably over the period of years measured by the expected return multiple under the contract, which for a two-life annuity reflects both lives.

    • 26 CFR § 1.1011-2 (LII), § 1.1011-2(a)(4)(ii)If in such case the annuity received in exchange for the property is nonassignable, or is assignable but only to the charitable organization to which the property is sold or exchanged, and if the transferor is the only annuitant or the transferor and a designated survivor annuitant or annuitants are the only annuitants, any gain on such exchange is to be reported as provided in example (8) Checked 2026-10-11.
    • 26 CFR § 1.1011-2 (LII), § 1.1011-2(c) Example 8(c)Such gain is to be reported by A ratably over the period of years measured by the expected return multiple under the contract Checked 2026-10-11.

  27. A QCD is excluded from gross income and cannot also be claimed as a charitable deduction. Only the portion that would otherwise be taxable can be a QCD; when an IRA has nondeductible basis, the QCD is treated as coming first from the taxable (pre-tax) money, overriding the normal pro-rata rule.

    • 26 U.S.C. § 408 (LII), § 408(d)(8)(E)shall not be taken into account in determining the deduction under section 170. Checked 2026-10-09.
    • 26 U.S.C. § 408 (LII), § 408(d)(8)(B), flush languageA distribution shall be treated as a qualified charitable distribution only to the extent that the distribution would be includible in gross income without regard to subparagraph (A). Checked 2026-10-09.
    • 26 U.S.C. § 408 (LII), § 408(d)(8)(D)Notwithstanding section 72, in determining the extent to which a distribution is a qualified charitable distribution Checked 2026-10-09.
    • IRS Publication 590-B (2025), Ch. 2, QCDsIf your IRA includes nondeductible contributions, the distribution is first considered to be paid out of otherwise taxable income. Checked 2026-10-09.
    • IRS Publication 590-B (2025), Ch. 2, QCDsYou can't claim a charitable contribution deduction for any QCD not included in your income. Checked 2026-10-09.

  28. Adjusted gross income means, for an individual, gross income minus the deductions listed in § 62(a), so an amount excluded from gross income never enters AGI.

    • 26 U.S.C. § 62 (LII), § 62(a)For purposes of this subtitle, the term "adjusted gross income" means, in the case of an individual, gross income minus the following deductions: Checked 2026-10-12.

  29. Treas. Reg. § 1.1011-2(c) Example 8 (the $100,000 / $59,755 / $40,245 gift annuity) is set on January 1, 1970, and points to later guidance for transfers valued after November 23, 1984; it illustrates the method, not current values.

    • 26 CFR § 1.1011-2 (LII), § 1.1011-2(c) Example 8(a)On January 1, 1970, A, a male of age 65, transfers capital assets consisting of securities held for more than 6 months to a church Checked 2026-10-10.
    • 26 CFR § 1.1011-2 (LII), § 1.1011-2(c) Example 8(b)See Rev. Rul. 84-162, 1984-2 C.B. 200, for transfers for which the valuation date falls after November 23, 1984. Checked 2026-10-10.

  30. A charitable remainder annuity trust (CRAT) pays a fixed sum each year of at least 5% and no more than 50% of the initial net fair market value of the trust property, at least annually, for life or lives of individuals living when the trust is created or for a term of no more than 20 years; the remainder goes to charity.

    • 26 U.S.C. § 664 (LII), § 664(d)(1)(A)a sum certain (which is not less than 5 percent nor more than 50 percent of the initial net fair market value of all property placed in trust) is to be paid, not less often than annually Checked 2026-10-09.
    • 26 U.S.C. § 664 (LII), § 664(d)(1)(A)for a term of years (not in excess of 20 years) or for the life or lives of such individual or individuals Checked 2026-10-09.
    • IRS: Charitable remainder trusts, Types of charitable remainder trustsA charitable remainder annuity trust (CRAT) pays a specific dollar amount each year. Checked 2026-10-09.

  31. A charitable remainder unitrust (CRUT) pays a fixed percentage, at least 5% and no more than 50%, of the trust's net fair market value revalued every year, so payments rise and fall with the trust's value.

    • 26 U.S.C. § 664 (LII), § 664(d)(2)(A)a fixed percentage (which is not less than 5 percent nor more than 50 percent) of the net fair market value of its assets, valued annually Checked 2026-10-09.
    • IRS: Charitable remainder trusts, Types of charitable remainder trustsThe payments generally must equal at least 5% and no more than 50% of the fair market value of the assets, valued annually. Checked 2026-10-09.

  32. A charitable remainder unitrust's payments, like a charitable remainder annuity trust's, may run only for a term of years not in excess of 20 years, or for the life or lives of individuals living when the trust is created.

    • 26 U.S.C. § 664 (LII), § 664(d)(2)(A)for a term of years (not in excess of 20 years) or for the life or lives of such individual or individuals Checked 2026-10-11.
    • 26 U.S.C. § 664 (LII), § 664(d)(2)(A)from which a fixed percentage (which is not less than 5 percent nor more than 50 percent) of the net fair market value of its assets, valued annually, is to be paid, not less often than annually, to one or more persons (at least one of which is not an organization described in section 170(c) and, in the case of individuals, only to an individual who is living at the time of the creation of the trust) for a term of years (not in excess of 20 years) or for the life or lives of such individual or individuals, Checked 2026-10-11.

  33. The value of the charitable remainder, determined under § 7520, must be at least 10% of the net fair market value of the property placed in the trust (for a CRUT, tested at each contribution).

    • 26 U.S.C. § 664 (LII), § 664(d)(1)(D)the value (determined under section 7520) of such remainder interest is at least 10 percent of the initial net fair market value of all property placed in the trust Checked 2026-10-09.
    • 26 U.S.C. § 664 (LII), § 664(d)(2)(D)with respect to each contribution of property to the trust, the value (determined under section 7520) of such remainder interest in such property is at least 10 percent Checked 2026-10-09.
    • IRS: Charitable remainder trusts, How a charitable remainder trust worksThe remainder donated to charity must be at least 10% of the initial net fair market value of all property placed in the trust Checked 2026-10-09.

  34. A CRAT or CRUT is not subject to federal income tax, so it can sell contributed appreciated assets without paying tax at the trust level; unrelated business taxable income is hit with a 100% excise tax. The IRS describes deferral of income tax on sales of contributed assets as a reason to create a CRT; the trust takes the donor's carryover basis.

    • 26 U.S.C. § 664 (LII), § 664(c)(1)shall, for any taxable year, not be subject to any tax imposed by this subtitle. Checked 2026-10-09.
    • 26 U.S.C. § 664 (LII), § 664(c)(2)(A)there is hereby imposed on such trust or unitrust an excise tax equal to the amount of such unrelated business taxable income. Checked 2026-10-09.
    • IRS: Charitable remainder trusts, Reasons to create a charitable remainder trustAllow you to defer income taxes on the sale of assets transferred to the trust Checked 2026-10-09.
    • IRS: Charitable remainder trusts, How a charitable remainder trust worksThe trust's basis in the transferred assets is carryover basis, which is the same basis that it would be in the hands of the donor Checked 2026-10-09.

  35. Charitable remainder trusts are irrevocable, and each CRT must file Form 5227 annually.

    • IRS: Charitable remainder trusts, How a charitable remainder trust worksCharitable remainder trusts are irrevocable. Assets that go in can't be taken back. Checked 2026-10-09.
    • IRS: Charitable remainder trusts, Tax filingsCharitable remainder trusts must annually file Form 5227, Split-Interest Trust Information Return . Checked 2026-10-09.

  36. Unrelated business taxable income includes income from debt-financed property — property held to produce income that is subject to acquisition indebtedness, such as a building with a mortgage on it. So for a charitable remainder trust, whose unrelated business taxable income is hit with a 100% excise tax under § 664(c)(2)(A), part of the income from a mortgaged asset is caught by that tax.

    • 26 U.S.C. § 512 (LII), § 512(b)(4)Notwithstanding paragraph (1), (2), (3), or (5), in the case of debt-financed property (as defined in section 514) there shall be included, as an item of gross income derived from an unrelated trade or business, the amount ascertained under section 514(a)(1), and there shall be allowed, as a deduction, the amount ascertained under section 514(a)(2). Checked 2026-10-11.
    • 26 U.S.C. § 514 (LII), § 514(b)(1)For purposes of this section, the term "debt-financed property" means any property which is held to produce income and with respect to which there is an acquisition indebtedness (as defined in subsection (c)) at any time during the taxable year Checked 2026-10-11.
    • 26 U.S.C. § 514 (LII), § 514(c)(1)For purposes of this section, the term "acquisition indebtedness" means, with respect to any debt-financed property, the unpaid amount of— Checked 2026-10-11.