Smarter Giving in Retirement and the Medicare Gotcha 

One of the biggest surprises in retirement is how the tax rules around charitable giving shift. During your working years, you might have claimed a deduction for every gift you made. But now, with the standard deduction so high—$32,300 for couples 65 and older in 2025—many retirees no longer itemize. That means the tax benefit from donations often disappears.

Still, there are strategies that can help you get more impact—for yourself and for the causes you care about.

Bunching Gifts
Instead of giving the same amount every year, some retirees find it useful to “bunch” or double up their giving. Suppose you donate $15,000 a year. On its own, that won’t push you over the standard deduction. But if you give $30,000 in one year, you can itemize and capture a bigger tax benefit, then fall back on the standard deduction the next year.

A popular way to do this is through a donor-advised fund. You contribute a lump sum in the year you want the deduction, then take your time sending money out to charities over the following years.

Giving Directly from an IRA
If you’re 70½ or older, another tool is the Qualified Charitable Distribution (QCD). This lets you transfer money straight from your IRA to a charity—up to $105,000 in 2025. If you’re already taking required minimum distributions, a QCD counts toward them. The key benefit: the transfer doesn’t show up as taxable income.

That can keep you in a lower tax bracket, reduce the tax on your Social Security benefits, and even help avoid Medicare surcharges. For many retirees, once RMDs begin, QCDs become the most efficient way to give.

Why Medicare Matters
This is more than just income taxes. Higher reported income can raise what you pay for Medicare Part B and Part D through something called IRMAA—short for Income-Related Monthly Adjustment Amount. These surcharges kick in once your modified adjusted gross income passes certain thresholds. The surprise for many retirees is that even a small bump in income—from extra IRA withdrawals or capital gains—can trigger hundreds or even thousands of dollars in added premiums each year. Because QCDs keep donations out of your taxable income, they can help you stay below those IRMAA cliffs.

A Real-Life Example
Consider a couple in their early 70s who give $20,000 each year to charity.

• If they simply write a check: Their income is $120,000, but after the $32,300 standard deduction, the $20,000 doesn’t provide any additional tax break. Their $120,000 still shows up as taxable income, which also counts toward Medicare’s IRMAA thresholds.
• If they bunch their donations: They give $40,000 in one year. That allows them to itemize and deduct more than the standard deduction that year, cutting their taxable income by roughly $8,000 compared to taking the standard deduction. The following year, they give nothing and take the standard deduction. Over two years, they’ve saved a few thousand dollars in federal taxes.
• If they use a QCD: The $20,000 is sent directly from their IRA to the charity. It still satisfies part of their required minimum distribution, but it never shows up as taxable income. Instead of reporting $120,000, they report $100,000. That not only lowers their income tax bill but also helps them avoid a Medicare premium surcharge, which can easily add more than $1,000 a year per person.

For this couple, the QCD produces the biggest combined savings.

Appreciated Assets
If you own stocks, mutual funds, or real estate that’s gone up in value, donating them directly to charity can be smart. You avoid paying capital gains tax, and you still get to deduct the fair market value if you itemize. It’s a win-win: the charity gets the full value, and you sidestep a tax bill.

Other Approaches
Some folks look at charitable trusts, which can provide lifetime income to you or heirs while leaving the remainder to charity. Others name a charity as the beneficiary of an IRA, since heirs would otherwise pay income tax on those withdrawals.

The Big Picture
The right strategy depends on your stage of retirement. In the early years, bunching donations or gifting appreciated stock might pair well with Roth conversions. Later on, QCDs often take the lead role once RMDs kick in.

Giving is always about generosity first. But with a little planning, it can also be about efficiency—helping your dollars go further for both you and the causes you support.

Research and final editing were AI-assisted. This article is intended for general information only. It isn’t advice, and you shouldn’t take action based solely on what you read here. Instead, use it to help frame the questions you bring to your tax or financial advisor.