Glossary of charitable giving terms

A rule starting in 2026. Itemized charity gifts are deductible only for the part above 0.5% of your AGI. The part below that floor carries forward only in a year when you also go over an AGI percentage limit. Even then, only the part tied to the kind of gift that went over carries forward. It doesn't affect QCDs, because a QCD is left out of income instead of being deducted.

Full explanation · Sources: 26 U.S.C. § 170 (LII), 26 U.S.C. § 170 (LII), 26 U.S.C. § 170 (LII), 26 U.S.C. § 408 (LII)

The rule that most heirs named on the account who aren't an eligible designated beneficiary must empty an inherited IRA by the end of the 10th year after the owner died. It applies when the owner died after 2019. If the owner died on or after the required beginning date, yearly withdrawals also continue during those years. If the owner died before it, nothing is required until the 10th year. Different deadlines apply if the IRA goes to an estate. Some trusts are treated like a named person.

Full explanation · Sources: IRS Publication 590-B (2025), IRS Publication 590-B (2025), IRS Publication 590-B (2025), IRS Publication 590-B (2025)

A 2026 rule for people whose income, before itemized deductions, reaches the top 37% bracket. Itemized deductions, including gifts, are cut by 2/37 of the smaller of two numbers: those deductions, or that income above where the 37% bracket starts. Each dollar the trim fully reaches saves about 35 cents of tax instead of 37. If less of your income is that high, the trim is smaller. QCDs aren't deductions, so it doesn't touch them.

Full explanation · Sources: 26 U.S.C. § 68 (LII), 26 U.S.C. § 68 (LII), 26 U.S.C. § 408 (LII)

Your total income minus a short list of set subtractions. It's on Form 1040 line 11. Many retirement tax rules start from AGI. That includes how much Social Security is taxed, Medicare's IRMAA and the limits on charity deductions. A QCD keeps the gift out of AGI. An itemized charity deduction does not lower AGI.

Full explanation · Sources: 26 U.S.C. § 62 (LII), SSA POMS HI 01101.010 Modified Adjusted Gross Income (MAGI), 26 U.S.C. § 86 (LII), 26 U.S.C. § 170 (LII), 26 U.S.C. § 408 (LII)

The age when QCDs become allowed. You must be at least 70½ on the day the money goes out, not just by the end of the year. It did not change when the RMD age rose to 73. So QCDs can start a few years before RMDs. Under the older IRS rule, you reach 70½ six calendar months after your 70th birthday.

Full explanation · Sources: 26 U.S.C. § 408 (LII), 26 CFR 1.401(a)(9)-2 (eCFR point-in-time, 2024-01-01)

Caps on how much itemized charity giving you can deduct in one year. Each cap is a share of your AGI. Cash to public charities is capped at 60%. Stock that went up in value and was held over a year is capped at 30%. For most private foundations, the caps are 30% for cash and most other gifts, and 20% for assets that went up in value. Anything over a cap carries forward.

Full explanation · Sources: 26 U.S.C. § 170 (LII), 26 U.S.C. § 170 (LII), 26 U.S.C. § 170 (LII), 26 U.S.C. § 170 (LII), 26 U.S.C. § 170 (LII), IRS Publication 526 (2025)

Stock, fund shares or other securities now worth more than you paid. If you held them more than a year and give them to a public charity, you can generally deduct the full market value. You generally pay no tax on the gain, unless the charity was already bound to sell the shares before you gave them. The deduction is capped at 30% of AGI. If you held them a year or less, you generally deduct what you paid or today's value, whichever is lower.

Full explanation · Sources: 26 U.S.C. § 170 (LII), 26 U.S.C. § 170 (LII), 26 U.S.C. § 170 (LII), 26 U.S.C. § 1411 (LII), IRS Private Letter Ruling 200821024 (describing Rev. Rul. 78-197, 1978-1 C.B. 83, and Palmer v. Commissioner, 62 T.C. 684)

Putting several years of charity gifts into one tax year. That way your itemized deductions beat the standard deduction that year. In the years between, you take the standard deduction. Each year you get one or the other. A donor-advised fund is a common way to bunch. You get the deduction the year you put money in, even if the gifts to charities go out later.

Full explanation · Sources: 26 U.S.C. § 63 (LII), 26 U.S.C. § 170 (LII), Rev. Proc. 2025-32 (2026 inflation adjustments)

The part of a charity gift you could not deduct this year because it went over an AGI limit. You can deduct it over the next five years. From 2026, it can also include the 0.5% floor amount from a year you went over a limit. Gifts of land kept for conservation get 15 years. The same percentage limit applies, and each year's own gifts count first. If the spouse who made the gift dies, their leftover amount can generally be used only on that spouse's final return.

Full explanation · Sources: IRS Publication 526 (2025), IRS Publication 526 (2025), 26 CFR § 1.170A-10 (LII), 26 U.S.C. § 170(b)(1)(E)(ii), 26 U.S.C. § 170 (LII)

You give money or other assets to a charity. It pays you a fixed amount for life. Part counts as a deductible gift: what you gave minus the payments' value. Each payment is split into up to three parts. One part is a tax-free return of your cost, until it's all paid back. If you gave assets that grew, part is capital gain. The rest is taxable income. A one-time QCD can fund one. Then there's no deduction and no tax-free part — every payment is ordinary income. See the page below.

Full explanation · Sources: 26 CFR § 1.1011-2 (LII), 26 U.S.C. § 72 (LII), 26 U.S.C. § 408 (LII), 26 U.S.C. § 408 (LII)

A charitable remainder trust that pays a fixed dollar amount each year. That amount is set between 5% and 50% of what the trust starts with. The payment never changes, and no money can be added later. The charity's share must be worth at least 10% of what goes in. The trust must also pass an IRS test showing it's unlikely to run out of money before the charity's turn, unless it has the IRS's sample early-ending wording.

Full explanation · Sources: 26 U.S.C. § 664 (LII), 26 CFR § 1.664-2 (LII), 26 U.S.C. § 664 (LII), Rev. Proc. 2016-42, 2016-34 I.R.B. 269

A trust that can't be undone. It pays you, or people you name, income for life, or for a set term of up to 20 years. Then what's left goes to charity. You get part of a deduction up front for the charity's share. The trust generally pays no income tax. But income from running a business, or from a mortgaged asset, is taxed at 100%. Otherwise, it can sell assets that went up in value without tax at the trust level. The two kinds are the CRAT and the CRUT.

Full explanation · Sources: 26 U.S.C. § 664 (LII), 26 U.S.C. § 664 (LII), IRS: Charitable remainder trusts, IRS: Charitable remainder trusts, 26 U.S.C. § 664 (LII)

A charitable remainder trust that pays a fixed percent of its value, between 5% and 50%. The value is checked every year, so payments rise and fall with the investments. Some versions pay only the income the trust actually earns, with make-up payments later. Others switch to the fixed percent after a set event, such as selling an asset that was hard to sell.

Full explanation · Sources: 26 U.S.C. § 664 (LII), 26 U.S.C. § 664 (LII), 26 CFR § 1.664-3 (LII)

The written receipt from a charity that the law requires for any single gift of $250 or more. It gives the cash amount or describes what you gave. It says whether you got anything back, and estimates what that was worth. You must have it by the day you file or the return's due date counting extensions, whichever comes first. QCDs need one too. By my reading, getting anything back for a QCD can keep the whole gift from counting as a QCD.

Full explanation · Sources: 26 U.S.C. § 170 (LII), 26 U.S.C. § 408 (LII), 26 U.S.C. § 170 (LII)

What you have put into an asset for tax purposes, usually what you paid for it. It's used to measure your gain or loss when you sell or give it. Inherited assets generally get a new basis equal to their value when the owner died. Traditional IRAs and other pre-tax accounts don't get that reset. Gifted assets usually keep the giver's basis. In an IRA, money you put in after paying tax on it is also called basis.

Full explanation · Sources: Publication 551, Basis of Assets, 26 U.S.C. § 1014 (LII), 26 U.S.C. § 1015 (LII), 26 U.S.C. § 408 (LII), 26 U.S.C. § 691 (LII), About Form 8606, Nondeductible IRAs

An account at a public charity that holds your charity gifts until you suggest grants to other charities. The charity that runs it is called the sponsoring organization. You get the deduction the year you put money in, not when grants go out. The sponsor legally controls the money. A DAF can't receive a QCD. Gifts to one don't count for the non-itemizer deduction.

Full explanation · Sources: 26 U.S.C. § 4966 (LII), 26 U.S.C. § 170 (LII), 26 U.S.C. § 4966 (LII), 26 U.S.C. § 408 (LII), 26 U.S.C. § 170 (LII)

An IRA heir who isn't held to the 10-year rule right away. They can generally spread withdrawals over their life expectancy instead. A surviving spouse who is the only beneficiary can generally treat the IRA as their own. This group is the owner's surviving spouse, the owner's minor child, a disabled or chronically ill person, or anyone no more than 10 years younger than the owner. For a minor child, the 10-year rule starts when the child turns 21.

Full explanation · Sources: IRS Publication 590-B (2025), IRS Publication 590-B (2025), IRS Publication 590-B (2025), 26 CFR § 1.401(a)(9)-4 (GPO, CFR 2025 title 26 vol 6)

The Form 1040 lines for money taken out of an IRA. Line 4a shows the total taken out, including any QCD. Line 4b shows only the taxable part. That is zero if all of it was a QCD. On the 2025 form, you check box 2 on line 4c to show that a QCD is included.

Full explanation · Sources: Instructions for Form 1040 (2025), Instructions for Form 1040 (2025)

The tax form your IRA firm files to report money taken out of your IRA. A QCD shows up as a regular IRA withdrawal. Through 2025 the form had no QCD code. For 2026 the firm may add code Y but doesn't have to. Either way, you claim the QCD yourself on Form 1040. A charity that issues a gift annuity also reports its payments to you on this form.

Full explanation · Sources: Instructions for Forms 1099-R and 5498, Instructions for Form 1040 (2025), Instructions for Forms 1099-R and 5498 (current online version, covers 2026), Instructions for Forms 1099-R and 5498

A code on Form 1099-R that lets your IRA firm mark a payment as a QCD. It goes with code 7 for your own IRA, code 4 for an inherited IRA, or code K for traditional IRA assets with no easy market price, owned or inherited. Using it is optional for 2026. So a 1099-R without code Y can still show a valid QCD.

Full explanation · Sources: Instructions for Forms 1099-R and 5498 (current online version, covers 2026), Instructions for Form 1040 (2025)

The form you add to your return when you deduct gifts that aren't cash, such as donated stock, totaling more than $500 for the year. Stock traded on a public market goes in Section A at any amount and needs no appraisal. Most other assets claimed above $5,000 go in Section B with a qualified appraisal.

Full explanation · Sources: IRS Publication 526 (2025), Instructions for Form 8283 (Rev. 12/2025)

The IRS form that tracks after-tax money in traditional IRAs. It reports money you put in without a deduction, withdrawals if you ever did that, and Roth conversions. If your IRA holds after-tax money, a QCD comes out of the taxable part first. Form 8606 is where that split is worked out.

Full explanation · Sources: About Form 8606, Nondeductible IRAs, 26 U.S.C. § 408 (LII), Instructions for Form 1040 (2025)

Income a person who died was owed but hadn't paid tax on yet, such as money in a traditional IRA. The heir who gets it pays income tax on it when it's received. It gets no step-up in basis. A public charity named as heir doesn't pay income tax, so it gets those dollars without tax.

Full explanation · Sources: 26 U.S.C. § 691 (LII), 26 U.S.C. § 501 (LII), 26 U.S.C. § 4940 (LII)

An extra amount added to Medicare Part B and Part D premiums when MAGI is above set lines. For 2026 the first level starts above $218,000 for joint filers and $109,000 for single filers. It's generally based on 2024 returns. By my reading, it charges each person on Medicare whose income is above the line for their filing status. A QCD lowers the MAGI it uses. An itemized deduction doesn't.

Full explanation · Sources: SSA POMS HI 01101.010 (12/02/2025), SSA POMS HI 01101.010 (12/02/2025), SSA POMS HI 01101.001, SSA POMS HI 01101.001, 26 U.S.C. § 62 (LII)

An IRA you hold as an heir after the owner dies. A surviving spouse can generally treat it as their own. Other heirs can't, and usually follow the heir payout rules, often the 10-year rule. An heir who is 70½ or older can make QCDs from an inherited IRA, but only from money that would otherwise be taxed.

Full explanation · Sources: IRS Publication 590-B (2025), IRS Publication 590-B (2025), 26 U.S.C. § 408 (LII)

The bank, brokerage or other firm that holds your IRA. For a QCD, this firm must pay the charity directly. Money paid to you first and then given away doesn't count as a QCD. The firm also reports the withdrawal on Form 1099-R. No income tax is held back from a QCD.

Full explanation · Sources: 26 U.S.C. § 408 (LII), 26 U.S.C. § 408 (LII), Instructions for Form 1040 (2025), IRS Notice 2007-7

Deductions, including charity gifts, that you list on Schedule A instead of taking the standard deduction. Each year you take one or the other, not both. Itemized deductions lower taxable income but not AGI. So they don't lower income numbers built on AGI, such as the one Medicare uses for IRMAA.

Full explanation · Sources: IRS Publication 526 (2025), 26 U.S.C. § 63 (LII), 26 U.S.C. § 63 (LII), 26 U.S.C. § 62 (LII)

An asset that would have a long-term gain if you sold it on the day you give it. For stock, that generally means you held it more than one year. Given to a public charity, it's generally deductible at its market value, up to 30% of AGI. You can choose a 50% limit instead. But then the deduction is generally cut to what you paid. The choice covers all such gifts that year.

Full explanation · Sources: 26 U.S.C. § 170 (LII), 26 U.S.C. § 170 (LII), 26 U.S.C. § 170 (LII)

AGI with certain amounts added back. There isn't just one MAGI; each rule sets its own. For Medicare's IRMAA it's AGI plus tax-free interest, generally from your return two years earlier. For the senior deduction it's AGI plus a few kinds of foreign income. A QCD is left out of AGI, so it's left out of these MAGI numbers too.

Full explanation · Sources: SSA POMS HI 01101.010 Modified Adjusted Gross Income (MAGI), 26 U.S.C. § 151 (LII), 26 U.S.C. § 86 (LII)

Starting in 2026, people who take the standard deduction can also deduct cash gifts to public charities. The cap is $1,000, or $2,000 on a joint return. Only cash counts. Gifts to donor-advised funds and supporting organizations don't. It lowers taxable income, not AGI.

Full explanation · Sources: 26 U.S.C. § 170 (LII), 26 U.S.C. § 170 (LII), 26 U.S.C. § 63 (LII), 26 U.S.C. § 170 (LII)

The common name for Public Law 119-21, the tax and budget law signed July 4, 2025. The law has no official short title. IRS pages now also call its tax parts the Working Families Tax Cuts. For charity giving, it added the non-itemizer cash deduction, the 0.5% floor and the 2/37 limitation, starting in 2026.

Full explanation · Sources: Public Law 119-21 (GovInfo), 26 U.S.C. § 170 (LII), 26 U.S.C. § 170 (LII), 26 U.S.C. § 68 (LII)

A charity that doesn't qualify as a public charity, such as a family foundation. Gifts to most private foundations have lower deduction limits than gifts to public charities. Assets that went up in value are generally deductible only at what you paid. Publicly traded stock held over a year is the exception, up to 10% of a company's stock. Most private foundations can't receive a QCD.

Full explanation · Sources: 26 U.S.C. § 170 (LII), 26 U.S.C. § 170 (LII), 26 U.S.C. § 170 (LII), 26 U.S.C. § 408 (LII), 26 U.S.C. § 170(b)(1)(A)(vii)

In tax rules, property means any asset you own, not just a home or land. Stock, fund shares and bonds all count. For charity gifts, the rules treat cash on its own, apart from property. So when the rules talk about giving property to charity, that usually means giving stock or fund shares that went up in value.

Full explanation · Sources: 26 U.S.C. § 170 (LII), 26 U.S.C. § 170 (LII), Publication 551, Basis of Assets

The total that decides how much of your Social Security is taxed. It's half your benefits plus all your other income, including tax-free interest. Above a first set amount for your filing status, up to 50% of benefits can be taxed. Above a second, higher amount, up to 85% can be. A QCD stays out of this total. A deducted cash gift doesn't.

Full explanation · Sources: IRS Publication 915 (2025), 26 U.S.C. § 86 (LII), 26 U.S.C. § 62 (LII)

A tax-exempt charity, such as a church, school or hospital, that the tax code treats as a public charity and not a private foundation. Gifts to public charities get the highest deduction limits, up to 60% of AGI for cash. QCDs can go to this group and to a few special private foundations. Those are operating foundations and two other kinds that pass all gifts on quickly or pool them. QCDs can't go to donor-advised funds or supporting organizations.

Full explanation · Sources: 26 U.S.C. § 408 (LII), 26 U.S.C. § 170 (LII), 26 U.S.C. § 170 (LII), 26 U.S.C. § 501 (LII), 26 U.S.C. § 170(b)(1)(A)(vii)

Money your IRA firm sends straight from it to an eligible charity once you're 70½ or older. It's left out of your taxable income instead of being deducted. Only money that would otherwise be taxed counts, and it can count toward your RMD. The 2026 limit is $111,000 per IRA owner. Donor-advised funds, supporting organizations and most private foundations can't get one.

Full explanation · Sources: 26 U.S.C. § 408 (LII), 26 U.S.C. § 408 (LII), 26 U.S.C. § 408 (LII), IRS Publication 590-B (2025), 26 U.S.C. § 408 (LII), IRS Publication 590-B (2025), 26 U.S.C. § 408 (LII), 26 U.S.C. § 408 (LII), IRS Notice 2007-7

The date the law sets for your first required minimum distribution. It's April 1 of the year after you reach your RMD age. Whether an IRA owner died before or after this date changes what heirs must take out. That includes whether yearly withdrawals continue under the 10-year rule.

Full explanation · Sources: Retirement plan and IRA required minimum distributions FAQs, 26 U.S.C. § 401 (LII), IRS Publication 590-B (2025)

The least the law makes you take out of a traditional IRA each year once you reach your RMD age. That age is 73 or 75, depending on the year you were born. You can take it all at once or in pieces during the year. If you own several IRAs, you can add up each one's RMD and take the total from any of them. Inherited IRAs are kept apart. IRAs inherited from the same person can be grouped the same way. A QCD counts toward it.

Full explanation · Sources: 26 U.S.C. § 401 (LII), IRS Publication 590-B (2025), IRS Publication 590-B (2025), IRS Publication 590-B (2025)

An interest rate the IRS sets each month. It's used to value the charity's share of a split gift, such as a charitable remainder trust. It's 120% of a federal mid-term rate. You can use the rate for the month of the gift or either of the two months before. It affects how big the charity deduction is.

Full explanation · Source: IRS: Charitable remainder trusts

A retirement law signed December 29, 2022, as Division T of Public Law 117-328. For charity giving, it raised the RMD starting age to 73, and later 75. It tied the QCD limit to inflation starting in 2024. It also created the one-time QCD to a charitable remainder trust or gift annuity.

Full explanation · Sources: Public Law 117-328 (GovInfo), 26 U.S.C. § 408 (LII), 26 U.S.C. § 401 (LII), 26 U.S.C. § 408 (LII)

An extra deduction of up to $6,000 for you, and for your spouse on a joint return, if 65 or older, for 2025 through 2028. You get it whether or not you itemize. Married couples must file jointly. Each person's Social Security number must be on the return. It shrinks by 6% of modified AGI above $75,000, or $150,000 on a joint return. On a joint return, it comes off each spouse's amount. A QCD isn't counted in that income.

Full explanation · Sources: 26 U.S.C. § 151 (LII), 26 U.S.C. § 151 (LII), Schedule 1-A (Form 1040) 2025, Additional Deductions

For QCDs, a charitable remainder annuity trust, charitable remainder unitrust or charitable gift annuity funded with a once-in-a-lifetime QCD. The 2026 limit is $55,000, and it counts toward the yearly QCD limit. It must be funded only by QCDs. Only you, your spouse or both can get the payments, and they can't be handed to anyone else. A gift annuity must start fixed payments of 5% or more within one year of funding. They're taxed as ordinary income.

Full explanation · Sources: 26 U.S.C. § 408 (LII), IRS Publication 590-B (2025)

The charity that owns and runs a donor-advised fund. It can't be a private foundation. Once you put money in, it legally controls the money. You can only give advice on grants and investments. For your deduction, you need a written receipt from the sponsor saying it has that full control.

Full explanation · Sources: 26 U.S.C. § 4966 (LII), 26 U.S.C. § 4966 (LII), 26 U.S.C. § 170 (LII)

The flat amount you can subtract from income instead of itemizing. For 2026 it's $32,200 for married couples filing jointly and $16,100 for single filers. Add $1,650 for each spouse 65 or older, or $2,050 if unmarried and not a surviving spouse. The same amount is added again for blindness. If it's bigger than your itemized deductions, charity gifts bring no itemized tax benefit.

Full explanation · Sources: Rev. Proc. 2025-32 (2026 inflation adjustments), 26 U.S.C. § 63 (LII)

The rule that heirs generally get a cost basis equal to an asset's value on the day the owner died. So growth during the owner's life isn't taxed when heirs sell. It doesn't apply to traditional IRAs and other pre-tax retirement accounts. Heirs pay income tax on those. That's one reason some people leave IRAs to charity and other assets to family.

Full explanation · Sources: 26 U.S.C. § 1014 (LII), 26 U.S.C. § 1014 (LII), 26 U.S.C. § 691 (LII)

A charity set up and run to support one or more specific public charities, and controlled by or tied to them. The law says supporting organizations can't receive QCDs. Gifts to them also don't count toward the non-itemizer charity deduction.

Full explanation · Sources: 26 U.S. Code § 509, 26 U.S.C. § 408 (LII), 26 U.S.C. § 170 (LII)

A group of shares bought on one date at one price. If you own several lots of the same stock and don't say which ones you're giving or selling, the oldest lot counts as going first. Mutual fund shares can use an average cost instead, so check with your broker. At a brokerage, you can pick lots by telling the broker at the time and getting it confirmed in writing. That lets you give the shares with the most gain.

Full explanation · Sources: 26 CFR § 1.1012-1 (LII), 26 CFR § 1.1012-1 (LII), 26 CFR § 1.1012-1(c)(1)(i)

The income your tax rates apply to. It's your total income minus the deductions allowed, including either the standard deduction or your itemized deductions. Itemized charity gifts and the non-itemizer charity deduction lower taxable income without lowering AGI.

Full explanation · Sources: 26 U.S.C. § 62 (LII), 26 U.S.C. § 63 (LII), Rev. Proc. 2025-32