Charity Parity Act Opens New Path for Retirement Giving

Lawmakers recently introduced bipartisan legislation in both chambers to create a new pathway for those with retirement savings in employer-sponsored accounts to give to charity. Recent charitable giving trends, changing demographics and new limitations on the tax benefit of itemized giving could make this new incentive popular with taxpayers.

The bill’s introduction coincides with a simmering reemergence of retirement policy discussions among Capitol Hill staff. While action isn’t imminent, the potential for divided government after this year has prompted attention to bipartisan issues like retirement legislation, which could provide an opening for this newly introduced proposal and other reforms relevant to charitable planning.

What’s in the Bill?

On May 13, Congressmen Don Beyer (D-Va.) and Mike Kelly (R-Penn.) and Senators Kevin Cramer (R-N.D.) and Chris Coons (D-Del.) introduced the Charity Parity Act (the Act). The Act would allow taxpayers age 70½ and older to make qualified charitable distributions (QCDs) directly from employer-sponsored retirement accounts, such as 401(k)s or 403(b)s, to qualifying charities.

Currently, if a retirement-aged taxpayer wants to use resources in an employer-sponsored retirement plan to support a charity, they would first need to roll over those funds into an individual retirement account to take a QCD or take a distribution from their employer-sponsored account subject to automatic tax withholding and then donate those funds.

Both options can reduce the value of the gift to charity and present logistical or compliance burdens that could dissuade the individual from making the charitable donation in the first place.

The new incentive would mirror the IRA QCD’s structure, capping contributions at $111,000. Taxpayers would also be able to make a one-time QCD to fund a split-interest gift, capped at $55,000, and QCDs couldn’t be used to fund a donor-advised fund (DAF), consistent with the IRA QCD. But, given the rising popularity of the giving vehicle and the bipartisan support for a similar proposal to allow IRA QCDs to DAFs, we could see DAFs added as eligible recipients in this bill in the future.

The Act seeks to streamline this process and has drawn support from the American Retirement Association, the National Association of Charitable Gift Planners and several other national non-profit organizations.

Tax Changes Could Increase QCD Giving

Recent charitable giving trends indicate that new retirement charitable giving incentives would be popular with taxpayers, especially given changing demographics and evolving tax policy.

According to a recent report from FreeWill, QCDs through its platform were up by 56% in 2024 and 47% in 2025. And they’re likely to grow even more popular in the years ahead as more Baby Boomers become eligible to make QCDs with substantial savings in their retirement accounts. Estimates place the value of assets in employer-sponsored retirement accounts at over $14 trillion, highlighting the enormous pool of resources this bill could unlock for charity.

New tax changes in the One Big Beautiful Bill Act will also make QCDs more attractive for donors. QCDs aren’t subject to the half-percent floor on the itemized charitable deduction or the 35% cap on the charitable deduction’s value enacted by that bill and effective Jan. 1. QCDs are treated as an exclusion from gross income rather than an itemized deduction, bypassing these new limitations.

QCDs also count toward taxpayers’ required minimum distributions, making them a potentially attractive option for taxpayers age 73 and above seeking to minimize taxable income while supporting charitable causes.

For wealth advisors, charitable planners, and non-profit fundraising professionals, the developments underscore the growing importance of retirement-based giving strategies as clients begin planning their tax and philanthropic goals for 2026 and beyond.

Looking Forward

The Act is unlikely to move quickly, with the limited time remaining this year and competing priorities. However, there’s growing interest on Capitol Hill in pursuing another bipartisan retirement bill in the coming years that could be a vehicle for this bill and others relevant to charitable and wealth planning.

Retirement is an issue that enjoys solid bipartisan support on Capitol Hill and often one where lawmakers can make progress despite a divided government, which many expect in Washington after November. Retirement policy is also a priority for some key Congressional taxwriters, especially Congressman Richie Neal (D-Mass.), who would be set to reassume the gavel on the Ways and Means Committee if the House flips.

These dynamics could create an opening for work on another bipartisan retirement package, building off 2022’s SECURE 2.0 Act.

This potential package could serve as a legislative vehicle for the Act and other proposals in the retirement charitable giving space, such as the bill to allow QCDs from IRAs to go directly into DAFs. In the year ahead, we’ll likely see advocates push to introduce other reforms in this space, such as lowering the age at which taxpayers can take a QCD to 65 or allowing for additional taxpayers to make additional QCDs to fund charitable gift annuities.

All these proposals and more could be on the table for a SECURE 3.0 package. But importantly, the reforms best positioned for inclusion will be those with the most robust, bipartisan support when the work begins in earnest. Lawmakers will likely prioritize proposals that have been vetted and sufficiently socialized, underscoring the importance of advocacy efforts today that can lay the foundation for durable, impactful policy victories down the line.

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