They say it’s better to give than to receive, and that’s especially true when clients use qualified charitable distributions.

Tax law changes made by the One Big Beautiful Bill Act are quietly reshaping charitable giving and income planning strategies for affluent retirees in 2026, particularly their use of qualified charitable distributions. The tax law’s new 0.5% adjusted gross income floor and 35% cap on itemized deductions have materially changed the economics of charitable giving, according to TaxStatus CEO Kevin Knull. The changes are making QCDs significantly more valuable because they bypass both limitations entirely by reducing AGI directly. Advisors should make sure they’re up to speed on the new changes to help clients avoid unnecessary tax bills.

“QCDs are great because they aren’t just a tax deduction,” Knull told Advisor Upside. “It’s a straight-up deletion.”

What’s Changed and Why It Matters

The new 0.5% AGI floor is, in essence, a rule that requires taxpayers who itemize deductions to subtract 0.5% of their adjusted gross income from their total annual charitable contributions. Under the rule, only the portion of donations that exceeds this threshold is deductible, while anything below it provides zero tax benefit. In practice, Knull said, this new 0.5% AGI floor limits charitable itemized deductions for nearly every client who itemizes. This applies before the traditional 60%, 50%, 30% and 20% AGI limits kick in, which means deductions will be smaller than what advisors and clients have been accustomed to.

An analysis published by the donor-advised fund platform Ren offers some numbers to illustrate the impact:

• For a client reporting $500,000 in AGI, the first $2,500 of charitable contributions is non-deductible.
• At $1 million AGI, the floor wipes out the first $5,000.

In practical terms, a top-bracket client making a $100,000 charitable gift previously received $37,000 in tax benefit. Under the new cap, that same gift yields $35,000. Two cents per dollar may sound small, but it compounds on large gifts and the impact stacks on top of that of the 0.5% floor.

Getting QCDs Right. These dynamics cast QCDs, which are already popular, in an even more favorable light, Knull said. It’s crucial, however, that these charitable contributions are properly handled and coded on the relevant tax forms. “The money needs to flow directly from your individual retirement account to the charity,” Knull said. “If it flows to you first, that’s going to be counted and taxed as ordinary income. That mistake happens more often than you might expect.” Under current rules, clients also cannot make contributions directly to a donor-advised fund, as the IRS requires QCD funds to go directly to operating public charities.

Knull’s last tip: QCDs are available starting at age 70.5, but many people falsely believe they’re only available at 73 when IRA required minimum distributions kick in. “You can do a lot to reduce RMDs by getting started as soon as you can with QCDs,” he said.

Have you ever asked a date about their emergency savings or 401(k) balance?

That may sound like a faux pas to many readers, but it’s just common sense for some in Gen Z. The generation is feeling the squeeze when it comes to the high cost of living and preparing financially for the future, new survey data from Bank of America shows. Even among Gen Z households earning more than $100,000, only 26% contribute to a 401(k). It’s not that they aren’t saving, but rather that the majority are focused on paying down debt, building emergency savings and preparing for important life events like buying a home. In this context, assessing a potential romantic partners’ financial wherewithal feels like a necessity, as does reducing the amount of money spent on dates and entertainment. Sure, dinner and a movie are nice, but so is a healthy emergency fund.

“We can joke about it, but the fact that Gen Z has this focus on assessing a potential partner’s financial situation says a lot about the challenges they’re facing,” said Matt Gellene, head of specialized consumer client solutions at Bank of America Merrill Lynch. “Gen Z is an important part of our client base, now and in the future. We can’t just laugh and overlook this.”

Feeling the Squeeze

Nearly a quarter of Gen Zers are delaying some aspect of dating or relationship progress due to their financial situation, according to the survey. Among Gen Zers who are in relationships but not living together, the same percentage is hesitant to move in together or get engaged because of questions about money. It’s no surprise, then, to see that single Gen Zers are seeking a partner who is responsible with money and has similar financial values. By the numbers:

• 74% of survey respondents would prioritize finding a partner who is financially responsible, while 66% would choose a partner who can provide financial security.
• 65% would prioritize finding a partner with positive financial behaviors, while 58% are seeking a partner with strong financial knowledge and 51% want a partner with good earning potential.

These perspectives hold true across the relationship status spectrum, Gellene noted. There are no significant differences whether respondents are single, dating or married. Overall, having irresponsible spending habits is one of Gen Z’s biggest romantic dealbreakers, with 43% saying they would not date or marry a person with such a trait. Serious red flag.

Why Advisors Should Care. Few financial advisors base their practice on serving Gen Z clients at present, Gellene noted, but that will eventually change. The generation is well educated and stands to earn and inherit significant wealth in the future, current cost-of-living challenges notwithstanding. Advisors who do nothing to prepare their practices to serve the unique needs and preferences of this generation could eventually fall behind.

Turns out all that “save, save, save” advice isn’t much help when it’s finally time to spend, spend, spend.

Most Americans are flying blind when it comes to a 401(k) withdrawal strategy, according to a new survey from the TIAA Institute and Nuveen. While most have given at least a little consideration, only 22% said they thought about it “a lot.” And, nearly all those surveyed wanted more guidance from their employers on how to plan for their retirement income, but even that advice may be too generic. Helping clients craft a strategy to safely spend their retirement nest eggs can be an opportunity for advisors to differentiate themselves and help fill an important planning gap.

“The irony is, the law that created the 401(k) back in 1974 was called the Employee Retirement Income Security Act. Income security. Yet for 50 years, we’ve designed 401(k) plans almost exclusively as savings vehicles, with no built-in way to convert those savings into lifetime income,” said Brendan McCarthy, head of Nuveen Retirement Investing. “The system has done a good job coaching people to save, but a poorer job preparing them to spend.”

Literacy Gap

While previous generations could cash their monthly pension checks and call it a day, withdrawal decisions for this generation of retirees are much more complicated, said Michael Lofley, a CFP at HBKS Wealth Advisors. Clients have to decide which accounts to draw from first, as well as figure out how Social Security, taxes and healthcare costs fit into the plan. Plus, many will have to balance those issues with the possibility of living 25 to 30 years in retirement. “Many retirees underestimate how interconnected those decisions are,” he said.

Most 401(k) holders aren’t equipped to answer these kinds of questions, according to the report:

• Participants only correctly answered about a third of questions about Social Security, Medicare and saving for retirement and about a quarter of long-term care and withdrawal questions.
• Some 44% underestimated average life expectancy, and 14% said they didn’t know. Only a third of workers surveyed answered the question correctly.

Playing the Long Game. Betting on an average life expectancy can be a trap that clients fall into, said Eric Diton, president and managing director of The Wealth Alliance, who added that his firm runs their analyses based on a life expectancy in the early to mid-90s. “Someone will say, ‘Oh, my parents died young,’” said Diton. “Your parents died in 1950. This is a different generation. Your parents didn’t know what cholesterol was.”