Many retirees are disappointed to find out they will not deduct their charitable gifts for income tax purposes this year. That’s because the 2017 Tax Cuts and Jobs Act sharply cut the number of filers who itemize by nearly doubling the standard deduction.

Just 8% of filers are expected to take a charitable deduction this year, down from 20% in the past, according to the Tax Policy Center in Washington, D.C.

But all is not lost for retirees with a charitable bent: Those over age 70½ can use a work-around that preserves the tax benefits of giving, even if they don’t itemize. In what’s called a qualified charitable distribution (QCD), retirees can donate all or a portion of their required minimum distributions (RMDs) from IRAs—up to $100,000 a year—directly to charity.

“The QCD comes right off the top of adjusted gross income, which is attractive from a tax-planning perspective,” said Peter P. DeVito, a partner with Cleveland-based Fairport Asset Management. “With the loss of the charitable deduction, QCDs are becoming very popular now, predominantly with clients who don’t need all or part of their RMD income.”

While retirees don’t get a write-off for their charitable gift QCD, they also don’t owe taxes on their retirement-account distributions they donate this way.

For a taxpayer in the 22% bracket, funneling a $5,000 RMD to a qualified charitable distribution saves $1,100 in federal income taxes, the same as if you’d been able to deduct it. Even though this rule became a permanent part of the tax code in 2015, the 2017 tax law raising the standard deduction made it that much more attractive, DeVito said.

“We have clients who do it as little as a couple thousand dollars up to $100,000 in QCDs. I think you’ll see people using them more and more beginning this year,” he added.

A smaller tax bill is not the only potential benefit. By donating their required minimum distribution, retirees reduce their adjusted gross income, which can mean less of their Social Security is taxed and they could see a reduction in their Medicare premiums.

There’s yet another tax-planning perk: “For states that don’t allow itemized deductions, retirees who use QCDs will also pay less in state taxes,” DeVito added.

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