The 2027 QCD Limit Is Already Set: $114,000, and $57,000 Once

Every fall, the IRS publishes the coming year’s retirement contribution limits and its qualified charitable distribution limit in the same notice — last year it was Notice 2025-67, covering both the 401(k) elective deferral limit and the QCD figures side by side. That timing creates a natural but mistaken assumption: if the two numbers appear on the same page on the same day, neither is knowable until that day arrives. It isn’t so. The short answer: the QCD limit for 2027 is already decided by the inflation data that exists right now — $114,000 for the ordinary annual exclusion, and $57,000 for the separate one-time election into a charitable remainder trust or gift annuity. The 401(k) limit that will sit next to it in the same notice is genuinely still open, because it runs on a CPI reading that doesn’t exist yet.

What a QCD is, briefly

A qualified charitable distribution is a payment made directly by an IRA trustee to a qualifying charity, available to IRA owners once they reach age 70½. Because the money never passes through the account owner’s hands, it is excluded from gross income rather than claimed as a deduction, and it counts toward satisfying that year’s required minimum distribution. The limit is per person, not per household or per return — each spouse with an IRA has their own separate limit, even on a joint return. A QCD cannot go to a donor-advised fund or to a supporting organization; it has to go to a qualifying public charity directly. This site’s main QCD guide covers the mechanics in full; this page is narrower, focused on where the 2027 dollar figures come from and why they can be stated now.

The statute and the rounding rule

The QCD limit lives in 26 U.S.C. § 408(d)(8). Subparagraph (A) sets the base annual exclusion at $100,000, and subparagraph (F) sets a separate one-time election, capped at $50,000, letting an IRA owner direct QCDs into a charitable remainder annuity trust, a charitable remainder unitrust, or a charitable gift annuity, provided the vehicle is funded exclusively by qualified charitable distributions. Subparagraph (G) is the indexing instruction, added for taxable years beginning after 2023: each of those base dollar amounts is increased by multiplying it by “the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins,” with the base comparison year set to 2022 rather than the usual 2016. The rounding instruction that follows it is specific and worth quoting exactly, because it differs from the round-down rule that governs some other inflation-indexed amounts in the tax code: “If any dollar amount increased under clause (i) is not a multiple of $1,000, such dollar amount shall be rounded to the nearest multiple of $1,000.” Nearest, not down.

Section 1(f)(3) runs on the average chained CPI-U for all urban consumers, BLS series SUUR0000SA0, over the twelve months ending August 31 of the prior year. For the QCD calculation, the comparison point is the same twelve-month window averaged for calendar year 2022 — September 2021 through August 2022 — which came in at 159.879. Every later year’s QCD limit is that base window’s average measured against the equivalent window ending in the relevant August.

Checking the method against three years the IRS has already confirmed

Before trusting this mechanism to project a number the IRS hasn’t announced, it should first be checked against numbers the IRS has already announced. The first indexed year, 2024, put the annual limit at $105,000 and the split-interest limit at $53,000. Notice 2024-80 raised them to $108,000 and $54,000 for 2025, and Notice 2025-67 raised them again to $111,000 and $55,000 for 2026. Running the same cost-of-living mechanics against each of those confirmed years reproduces every one of them:

Six for six on the confirmed years, using the identical formula that produces the 2027 row. That is not a coincidence built to fit a target after the fact; it is the same statutory mechanism doing the same arithmetic every year, checked against every year the IRS has already published.

Why the missing October 2025 CPI report doesn’t matter here

There is one real complication sitting inside the twelve-month window that ends in August 2026, and it deserves to be named directly rather than glossed over. The Bureau of Labor Statistics never published a CPI reading for October 2025, because data collection stopped during that year’s government shutdown. Anyone reconstructing the window has to choose between two approaches: average the eleven months that were actually published, or fill the hole with an estimate — in this case, the mean of the September and November 2025 readings.

The eleven-month average for the relevant window comes to 182.8565; imputing the missing month instead brings it to 182.6293. Measured against the 159.879 base, those two paths produce unrounded annual QCD figures of $114,371.60 and $114,229.50 — about $142 apart. For the annual limit to round up to $115,000 instead of $114,000, the unrounded number would have to reach $114,500; the higher of the two methods falls $128.40 short of that line. For it to round down to $113,000, the unrounded number would have to drop below $113,500, which neither method comes close to. The same holds for the split-interest figure: $57,185.80 versus $57,114.80, both comfortably inside the range that rounds to $57,000. However the IRS eventually chooses to treat the missing October reading in its own internal calculation, it changes the decimals here, not the answer.

Why this is settled before the 401(k) limit is

The reason the QCD figure can be stated now while the 401(k) figure genuinely cannot sits in which CPI series each statute points to. The QCD limit under section 408(d)(8)(G) borrows the section 1(f)(3) cost-of-living formula — the same one that sets the income tax brackets — and that formula’s twelve-month window closes every August 31. The August 2026 chained CPI-U reading, the last piece that window needs, was published on September 11, 2026. The elective-deferral limit for 401(k) plans is indexed under an entirely different provision, section 415(d), which runs on third-quarter CPI-U rather than the twelve-month chained average. The third quarter of 2026 doesn’t close until September 30, and the CPI reading for its final month, September 2026, is not released until October 14, 2026. This site’s 2027 401(k) and IRA contribution limits projection has to wait for that date. The QCD figure does not, even though both numbers will likely appear in the same eventual IRS notice, the way 401(k) and QCD figures shared a single notice, Notice 2025-67, last year.

What changed in 2026 that makes a QCD worth more

A QCD has always sat outside the ordinary deduction system, but a 2025 tax law, Public Law 119-21, made that distinction considerably more valuable starting in tax year 2026. Three changes matter here, and a fourth applies to older filers. First, itemized charitable deductions now face a floor: 26 U.S.C. § 170(b)(1)(I) allows a deduction only “to the extent that the aggregate of such contributions exceeds 0.5 percent of the taxpayer’s contribution base,” which is approximately adjusted gross income. A donor with $300,000 of AGI who writes a $20,000 check to charity and itemizes loses the first $1,500 of that gift to the floor and can deduct only $18,500. The identical $20,000 routed as a QCD by an eligible IRA owner is simply excluded from income — there is no floor to clear, because there is no deduction being claimed in the first place. How the floor and the new $1,000/$2,000 non-itemizer deduction work for donors who are not IRA owners is covered in the 2026 charitable deduction.

Second, filers in the top 37% bracket now face a new overall limitation on itemized deductions, expressed as a 2/37 reduction under the amended section 68. A QCD sidesteps that limitation entirely, again because it was never itemized to begin with. Third, starting in 2026, non-itemizers gained a new deduction of their own under section 170(p): up to $1,000 in cash gifts to qualifying public charities, or $2,000 on a joint return, without itemizing at all. That is a real benefit for smaller gifts, but anyone eligible for a QCD and giving more than that quickly exceeds what the new non-itemizer deduction can shelter.

The fourth interaction is specific to filers 65 and older: a temporary senior deduction, in place for 2025 through 2028, of $6,000 per person, reduced by 6% of modified AGI above $75,000 for a single filer or $150,000 on a joint return. Because a QCD lowers AGI rather than adding a deduction on top of it, it can restore part of a senior deduction that a higher AGI would otherwise phase out — the worked example below shows exactly how much.

The example: writing a check versus routing the RMD

Take a single filer, age 74, with $30,000 in Social Security benefits, $50,000 in pension and other income, and a $20,000 required minimum distribution due from an IRA, who wants to give $10,000 to charity in 2026.

Option A: take the full RMD as ordinary income, then write a $10,000 check. Other income totals $70,000. Social Security benefits are taxable at the 85% cap here, adding $25,500, for an AGI of $95,500. The senior deduction of $6,000 is reduced by 6% of the $20,500 by which AGI exceeds $75,000 — a $1,230 reduction — leaving $4,770. Add the standard deduction of $16,100, the additional deduction for being 65 or older of $2,050, and the new non-itemizer cash-gift deduction of $1,000. Total deductions: $23,920. Taxable income: $71,580. Using the 2026 single brackets — 10% to $12,400, 12% to $50,400, 22% to $105,700 — the tax comes to $1,240 plus $4,560 plus 22% of $21,180 ($4,659.60), for a total of $10,459.60.

Option B: send $10,000 of the RMD directly to charity as a QCD. Other income falls to $60,000 (the $10,000 QCD is excluded, leaving $10,000 of the RMD as taxable). Social Security stays taxable at the same 85% cap, still $25,500, for an AGI of $85,500. The senior deduction reduction is now 6% of $10,500, or $630, leaving $5,370 of the $6,000 available. There’s no separate charitable deduction this time, because the gift was excluded from income rather than claimed as a deduction. Total deductions: standard $16,100 plus additional aged $2,050, for $18,150. Taxable income: $61,980. Tax: $1,240 plus $4,560 plus 22% of $11,580 ($2,547.60), for a total of $8,347.60.

The QCD saves $2,112.00 in federal income tax, despite the fact that Option A also captured a $1,000 charitable deduction that Option B gave up. The $9,600 gap in taxable income breaks down as $10,000 lower AGI, minus the $1,000 non-itemizer deduction forgone, plus $600 of senior deduction recovered as AGI fell. Both AGI figures in this example sit below the 2026 first-tier Medicare IRMAA threshold for a single filer, $109,000, so the surcharge doesn’t enter into this particular comparison — it would for a filer closer to that line, which is where this site’s 2027 IRMAA brackets projection becomes relevant.

The one-time election: $57,000, and only once

Separate from the annual $114,000 projection, section 408(d)(8)(F) allows a single, once-in-a-lifetime election to direct QCDs into a charitable remainder annuity trust, a charitable remainder unitrust, or a charitable gift annuity — provided that vehicle is funded exclusively with qualified charitable distributions and nothing else. That election has its own base amount, $50,000, indexed by the identical formula and rounding rule as the annual limit, and projects to $57,000 for 2027 on the same August 2026 data, up from $55,000 in 2026. Because the statute caps this election at once per taxpayer over their lifetime, it is a different kind of decision than the annual exclusion, which resets every year — an IRA owner sizing up a $57,000 gift into a split-interest vehicle is using an option they will not have again.

Reporting a QCD: the new code Y

Tax-year 2026 introduces a new reporting wrinkle. The 2026 Instructions for Forms 1099-R and 5498 state plainly: “We added code ‘Y’ to the list of codes for box 7a to identify a qualified charitable distribution (QCD).” The same instructions add that “For tax year 2026, the use of code Y to report a QCD is optional,” and that “When using code Y, you must use either code 4, 7, or K.” In practice, that means an IRA custodian issuing a 1099-R for 2026 may flag the QCD with code Y, or may not — the code’s use isn’t required yet. Either way, the responsibility to report the QCD correctly still falls on the taxpayer’s own return: the full IRA distribution goes on Form 1040 line 4a, the taxable amount — after subtracting the QCD — goes on line 4b, and the word “QCD” is written next to line 4b. A 1099-R without code Y doesn’t mean the distribution wasn’t a QCD; it just means the custodian didn’t use the new optional flag.

The calendar from here

The IRS has not yet issued the notice that will make the 2027 QCD figures official. Based on the pattern of recent years — Notice 2025-67 for 2026, Notice 2024-80 for 2025 — it typically arrives in the fall, in the same document that sets the 401(k) and IRA contribution limits. This page will be updated once it’s published. Until then, the underlying data is complete, checked against three years of confirmed IRS numbers, and not sensitive to the one open question, the missing October 2025 CPI reading, that does affect other 2027 figures elsewhere in the tax code. Readers tracking the fuller set can follow this site’s IRS 2027 inflation adjustments tracker, which holds this projection alongside others still waiting on later CPI data.

Sources

• 26 U.S.C. § 408 — law.cornell.edu/uscode/text/26/408
• 26 U.S.C. § 170 — law.cornell.edu/uscode/text/26/170
• 26 U.S.C. § 1(f)(3) — law.cornell.edu/uscode/text/26/1
• Notice 2025-67 (2026 QCD and retirement plan limits) — irs.gov/pub/irs-drop/n-25-67.pdf
• Notice 2024-80 (2025 QCD and retirement plan limits) — irs.gov/pub/irs-drop/n-24-80.pdf
• 2026 Instructions for Forms 1099-R and 5498 — irs.gov/pub/irs-pdf/i1099r.pdf
• Bureau of Labor Statistics, Chained CPI-U series SUUR0000SA0 — api.bls.gov/publicAPI/v2/timeseries/data/
• finbarrow, IRS 2027 inflation adjustments tracker — companion page for the shared CPI window