Are qualified charitable distributions always the best tax-saving move?

Qualified charitable distributions (QCDs)¹ have become a popular way to unlock the tax savings of philanthropic gifts. Indeed, you may have read about this strategy in the news or had it recommended to you by a friend.

However, for high-net-worth individuals, gifting QCDs from an individual retirement account (IRA) may not even be an option (one has to be at least 70½ to make a QCD) and even if it is, it constitutes but one way to enhance the tax efficiency of charitable donations.

Another, often more effective method for individuals who itemize deductions, is to gift publicly traded appreciated securities held for more than one year. 

Here are some ways to evaluate which strategy best fits your circumstances.

Gifting publicly traded appreciated securities: Efficiency and optionality

Donating publicly traded stocks—especially if the basis is very low relative to market value at the time of the gift—is generally the most tax-efficient donation method available. Consider the following:

• There are no age restrictions or dollar limits with this approach (but certain limitations can apply)
• Appreciated securities can be transferred directly to any form of 501(c)(3) charity, whether a public charity (including schools, museums, churches, and in this context donor-advised funds (DAFs)) or a private foundation
• Deductions are limited to a percentage (20% or 30%, depending on the recipient) of your adjusted gross income (AGI), with a five-year carryforward available for contributions that exceed this ceiling

When gifting publicly traded appreciated stock held long-term (typically, more than one year), you would not only be eligible for an income tax deduction based on the fair market value of the donated asset, but would also not have to pay capital gains tax on that asset’s unrealized appreciation.  However, that deduction could be reduced by two new limitations introduced by the One Big Beautiful Bill Act (OBBBA) and effective starting January 1, 2026: 

• 0.5% charitable deduction floor: This haircut reduces a taxpayer’s total allowable charitable deduction by 0.5% of AGI for those who itemize.
• Overall limitation on itemized deductions: This reduces the value of itemized deductions, including charitable contributions, by roughly 5.4% for taxpayers in the top tax bracket.

Taxpayers should consider strategies to mitigate the effect of these limitations, including consolidating charitable contributions in one year, rather than donating a smaller amount to charity each year. 

Case study example    

In 2026, a couple in the highest tax bracket with $1 million AGI making a cash g­­ift of $100,000 would enjoy a tax savings of up to $33,250 (compared with making no gift at all).² However, if they were to make a similarly valued gift ($100,000) with publicly traded appreciated stock held long-term that has a basis of $50,000, the tax savings could increase by up to $11,900. 

Moreover, donations of even modestly appreciated securities can be more beneficial than other forms of gifting.

QCDs: Streamlined giving from IRAs 

Thanks to widespread coverage in the financial press, QCDs have also become a popular strategy with retirees as a systematic way to donate directly from IRAs, potentially reducing taxable required minimum distributions (RMDs).³

For those over the age of 70½, QCDs are an attractive way to fund charitable goals, provided: these distributions come directly from IRA assets; are limited to $111,000 in 2026 (adjusted annually for inflation); and go directly to a public charitable organization. They cannot be directed to DAFs or private foundations.

QCDs offer these benefits:

• Reducing your AGI—Because QCDs come directly from either IRA distributions or RMDs, they effectively serve as an adjustment to total income.
  Reducing total income in this way is valuable because total income is the starting point in calculating AGI, a reduction of which benefits taxpayers eligible for, or subject to, phaseouts, deduction limits or exposure to net investment income tax—all of which are determined based on a taxpayer’s AGI.
• Net investment income tax (NIIT) and AGI management—The 3.8% NIIT applies to net capital gains, dividends, interest and other forms of investment income. Individuals are subject to the NIIT if they have net investment income and a modified AGI above the statutory threshold amount ($250,000 for married couples filing jointly).⁴ Gifting with a QCD can lower the topline AGI number, making it possible for a taxpayer to stay below the NIIT threshold (or other tax thresholds based on AGI), thereby generating additional tax savings. 
• Medicare premium savings—For retirees enrolled in Medicare, an indirect reduction in total income resulting from a QCD (compared to a donation of an equivalent amount to charity from other assets) can yield additional benefits: Medicare premiums are means tested through the Income-Related Monthly Adjustment Amount (IRMAA) calculation, which is also based on a modified AGI calculation. Therefore, lowering “above-the-line” income through a QCD can result in annual savings on premiums.
• Standard deduction advantage—The OBBBA enacted in July 2025 enhanced the standard deduction. In 2026, the standard deduction for joint filers is $32,200.⁵ It also introduced a $2,000 charitable deduction for cash donations to public charities by joint filers ($1,000 for other filers) who use the standard deduction. Therefore, if a taxpayer’s itemized deductions, which can include charitable giving, fall short of the standard deduction, from a tax perspective, charitable contributions may be less beneficial. Because QCDs amount to a reduction of total income and not a deduction, QCDs are not subject to limitations on deductibility that could reduce the tax benefit of the donation.
• Consider new limitations on charitable deductions starting in 2026– Beginning in 2026, QCDs may be more attractive to high-income itemizers who are subject to the 0.5% charitable floor and overall limitation on itemized deductions introduced by the OBBBA. As mentioned above, QCDs are not subject to these limitations.

QCDs are not always the best way to give

The ancillary tax savings associated with QCDs won’t often surpass those of a donation made with appreciated securities. Given the thresholds and potential tax savings, this is especially true for high-net-worth and ultra-high-net-worth retirees.

Using Medicare premiums as an example: Dropping from the highest to the second-highest IRMAA threshold results in approximately $1,161 in annual savings for a married couple—a relatively small amount, given the tax savings that could be achieved by gifting appreciated securities.

Also: Funding charitable gifts from publicly traded appreciated securities held long-term in a taxable portfolio as compared to QCDs from an IRA is not a binary decision. These strategies can be used in concert, depending on your appetite and capacity for charitable giving each year.

In the event you are deciding between the two options, you might consider (with your tax advisor):

• Does a QCD lead to a lower AGI, resulting in significant tax savings or lower Medicare premiums that are more economically valuable than the savings derived from the unrealized gains?
• Would your donation cause you to exceed the standard deduction amount and the charitable deduction for non-itemizers in a given tax year?
• How important is involving your family or the next generation in your giving strategy, perhaps through a charitable vehicle such as a DAF or a private foundation?

Moving toward an intentional giving strategy

Moving away from a reactive giving strategy requires a deeper conversation about your family’s charitable priorities, including identifying:

• Which causes you most wish to support
• How much of your wealth will be earmarked for philanthropy
• When you would like to endow these causes

Once these decisions have been made, your family can formulate a thoughtful approach to selecting the assets and planning techniques that will achieve the optimal tax outcome.

We can help

Your J.P. Morgan team can provide meaningful insight and assistance to help you and your family achieve your desired philanthropic goals. You should also speak with your tax advisor about which actions may be right for you. 

JPMorgan Chase & Co., its affiliates, and employees do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal and accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any financial transaction.​