QCDs, donor-advised funds, or appreciated shares: giving tax-efficiently

Last reviewed July 2026 · 5 min read

Writing a check is the least tax-efficient way to give. Retirees in particular have three better tools — qualified charitable distributions, appreciated shares, and donor-advised funds — and choosing among them is mostly a question of your age, what you own, and whether you itemize.

The 2026 rules raised the stakes

Two changes make this decision more interesting starting in 2026. First, itemizers now face a floor: only charitable contributions above 0.5% of adjusted gross income are deductible. Second, non-itemizers get a small consolation — a deduction of up to $1,000 ($2,000 on a joint return) for cash gifts to qualifying charities, even while taking the standard deduction ($32,200 joint, $16,100 single for 2026). With a standard deduction that large, many retirees do not itemize at all — which means an ordinary cash donation beyond those small caps often produces zero tax benefit.

QCDs: the retiree’s first choice after 70½

A qualified charitable distribution sends money directly from your IRA to a charity. It is available from age 70½, capped at $111,000 per person for 2026 (indexed annually), and the amount never appears in your income at all. That is stronger than a deduction: it works whether or not you itemize, it ignores the new 0.5% floor, and because it reduces AGI rather than taxable income, it also keeps MAGI down — which matters for IRMAA Medicare surcharges and the taxable share of Social Security. Best of all, once RMDs begin, a QCD counts toward the year’s required minimum distribution: charity absorbs income the IRS was about to force on you. The catch: it must come from an IRA (not a 401(k)), it must go directly to the charity, and donor-advised funds and private foundations are not eligible recipients.

Appreciated shares: give the gain away

If you are under 70½ — or giving beyond the QCD cap — the next best asset is usually long-held stock in a taxable account. Donate shares held more than a year and you deduct the full market value (if you itemize, generally up to 30% of AGI for appreciated property) while nobody ever pays the capital-gains tax on the appreciation — not you, and not the tax-exempt charity. Donating $50,000 of stock with a $10,000 basis beats selling it, paying tax on $40,000 of gain, and donating what is left. Never donate shares sitting at a loss; sell those first, harvest the loss, and give the cash.

Donor-advised funds: bunching the deduction

A donor-advised fund (DAF) separates the tax event from the giving. You contribute — ideally appreciated shares — and take the full deduction that year, then recommend grants to charities over many years. That enables bunching: instead of $10,000 a year that never clears the standard-deduction hurdle, contribute five years’ worth ($50,000) in one high-income year — say, the year of a big Roth conversion or a final working year — itemize once, and take the standard deduction the other four. The new AGI floor strengthens the case for concentrating gifts into fewer, larger years.

Which tool when

A rough decision order: past 70½ with an IRA, QCDs first — they beat everything until the cap. Itemizing in a spike-income year, appreciated shares into a DAF. Modest regular giving with the standard deduction, remember the $1,000/$2,000 cash deduction and consider bunching the rest. These tools stack: a couple in their 70s can do QCDs for annual giving and still fund a DAF with appreciated stock in a conversion year.

Try it in Deorbit Plan

The Strategy panel has a “Qualified charitable distributions from age 70½” input — the simulator routes that amount out of pre-tax before taxes are computed and counts it against each year’s RMD, so you can watch lifetime taxes and IRMAA drop on the Taxes & MAGI chart. Other gifts live in the Giving & Legacy panel, where each gift is funded from a specific account (taxable, pre-tax, Roth, or your normal withdrawal order) with normal tax mechanics applied — compare funding the same gift from different buckets and see what your heirs keep after taxes.

Educational content only — not financial, tax, or investment advice.

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