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OBBBA, IRAs, and QCDs: Oh My!

If you’ve ever felt like charitable tax planning is full of alphabet soup, you’re not alone. Between IRAs, QCDs, and now the One Big Beautiful Bill Act (OBBBA), even the most seasoned advisors are sorting through complex rules to guide their clients. While the OBBBA shook up a variety of tax provisions, it also created more reasons to take a fresh look at how IRAs can be used in charitable planning. Here are five of the most common questions we’ve been hearing lately.

Did the OBBBA change the rules for Qualified Charitable Distributions (QCDs)?

The short answer is no. The rules governing QCDs remain in place. Clients over the age of 70½ can still direct up to $108,000 in 2025 from their IRA to an eligible charity. This can include many types of funds at a community foundation. Because QCDs count toward required minimum distributions but don’t show up as taxable income, they remain one of the most straightforward ways for retirees to make a charitable impact.

Are QCDs more valuable after the OBBBA?

Yes. The new legislation adds hurdles for itemized charitable deductions beginning in 2026. A 0.5% adjusted gross income floor will apply, and a 35% cap on deduction value will affect higher-income taxpayers. QCDs avoid both restrictions. Since QCDs reduce taxable income directly without requiring itemization, they offer retirees a consistent and reliable planning tool. Advisors should keep this in mind as they look ahead to a more restrictive environment for other types of charitable gifts.

When should advisors involve the community foundation?

As soon as you think a client might be a good candidate. Community foundations can accept QCDs into several types of funds, including designated funds, field-of-interest funds, and unrestricted funds. While donor-advised funds are not eligible recipients under IRS rules, there are creative strategies for clients who already use donor-advised funds. Foundations can help establish an additional eligible fund to complement the donor-advised fund, creating a flexible plan that balances tax advantages, legacy goals, and community impact.

Why are IRAs such powerful legacy gifts?

IRAs are attractive during life because contributions may be deductible and assets grow tax-deferred. They also shine as charitable bequests. If an IRA passes to heirs, distributions are taxable as ordinary income. If the same IRA is left to charity, however, the funds can be withdrawn tax-free. Plus, charitable bequests are deductible from the taxable estate. That means IRAs can accomplish two goals at once: avoiding significant tax burdens and leaving a meaningful legacy through philanthropy.

Do QCDs always need to go directly to a charity?

Not necessarily. A special rule allows a portion of a QCD—up to $54,000 per taxpayer in 2025—to fund what’s known as a “split-interest” gift. This can be set up through a charitable remainder trust (CRT) or a charitable gift annuity (CGA). For most clients, the CGA is the simpler choice because it avoids the administrative complexity of a CRT. These arrangements allow a client to create a stream of income for life while still committing assets to charity.

Final Thoughts

The intersection of IRAs, QCDs, and the OBBBA highlights how important it is for advisors to stay informed. The rules may be complex, but the opportunities are significant. For clients over 70½, QCDs remain one of the most effective ways to give. For clients thinking about legacy planning, IRAs can create an enduring charitable footprint while reducing taxes.

If you have clients who are weighing their charitable giving options, reach out to your local community foundation. Together, you can design a strategy that fits each client’s goals and adapts to the new tax landscape.