Charitable Gift Annuity: How It Works, 2026 Rates and Taxes

What is a Charitable Gift Annuity?

A charitable gift annuity is a contract with a charity: you give it cash or other assets, and it pays you a fixed income for life. Part of your gift counts as a tax deduction, and whatever is left when you die goes to the charity. It pays less than a commercial annuity because about half the gift is meant to end up with the charity.

How a charitable gift annuity works

A charitable gift annuity (CGA) is issued by the charity itself, not by an insurance company. The process is simple:

1. You make a gift of cash, stock or other property to a charity that offers gift annuities.
2. The charity pays you a fixed amount every year for life, or for two lives if you add a spouse.
3. You take a partial tax deduction for the part of the gift the IRS treats as a donation.
4. The charity keeps what remains when the last annuitant dies.

The gift is irrevocable, so you cannot get the lump sum back once the contract is signed. Each gift annuity supports one charity, so supporting two charities takes two contracts.

Charitable gift annuity rates for 2026

Most charities use the suggested maximum rates set by the American Council on Gift Annuities (ACGA). The current schedule took effect January 1, 2024, and is still in place for 2026.

• Older donors get higher rates because payments are expected to last fewer years.
• The rate is locked for life once the contract is signed. It does not rise with inflation.
• Deferred gift annuities pay more. If payments start years after the gift, the charity can offer a higher rate.

Charitable gift annuity vs. an immediate annuity

A single premium immediate annuity (SPIA) from an insurance company works the same way on the surface: a lump sum in, fixed income for life out. The difference is who keeps what is left.

If your main goal is income, a SPIA usually pays more. You can compare by running your age through our immediate annuity calculator. If you also want to leave a gift to a charity you already support, a CGA can do both jobs at once.

How a charitable gift annuity is taxed

• Charitable deduction: you can deduct the gift minus the present value of the payments you will receive. It only helps if you itemize.
• 2026 deduction rules: itemized charitable deductions now apply only to giving above 0.5% of your adjusted gross income (Kiplinger).
• Payments funded with cash: part of each payment is a tax-free return of your gift until you reach your life expectancy. The rest is ordinary income.
• Payments funded with appreciated stock: part of the capital gain is spread over your life expectancy instead of being taxed all at once.
• Estate taxes: the gift leaves your estate, which can matter for very large estates.

For how payments from a commercial annuity are taxed, see are annuities taxable.

Funding a gift annuity from your IRA

The SECURE Act 2.0 lets IRA owners make a one-time qualified charitable distribution (QCD) to a charitable gift annuity. The rules are strict:

• Limit: up to $55,000 in 2026, as a one-time election (IRS Notice 2025-67).
• Age: you must be at least 70½ when the IRA distribution is made.
• Who gets paid: only you, or you and your spouse.
• Payments: fixed, at least 5% a year, starting within one year of funding.
• Taxes: the distribution is not taxed and counts toward your required minimum distribution. There is no charitable deduction, and every payment you receive is taxed as ordinary income.

Details are in IRS Publication 590-B.

Is a charitable gift annuity safe?

Your payments are a promise from the charity, backed by its assets. A gift annuity is not an insurance product, so it is not protected by the insurer reserves and state insurance oversight behind a commercial annuity.

• Choose an established charity. Large universities, hospitals and national nonprofits have the deepest asset bases.
• Check state rules. Some states regulate gift annuities. New York, for example, requires charities to hold reserves, and larger programs need a state permit.
• Do not put all your income in one CGA. If you need the money to live on, a commercial annuity from a highly rated insurer may be the safer base. See are annuities safe for how insurer protection works.

Charitable gift annuity pros and cons

Pros

• Fixed income for life for you, or for you and a spouse.
• A partial tax deduction in the year you give.
• Capital gains spread out when you give appreciated stock.
• A lasting gift to a charity you care about.
• Low minimums. Many charities start at $5,000 to $10,000, far below a charitable remainder trust.

Cons

• Lower income than a commercial immediate annuity at the same age.
• Irrevocable. You cannot get your money back.
• No inflation protection. Payments stay the same for life.
• Nothing for heirs. The remainder goes to the charity.
• Backed by one charity, not by an insurance company.

Charitable gift annuity vs. charitable remainder trust

• Setup: a CGA is a simple contract with the charity. A charitable remainder trust (CRT) needs an attorney and a trust document.
• Minimum: CGAs often start at $5,000 to $10,000. CRTs typically need about $250,000 to be worth the cost (Fidelity Charitable).
• Charities: a CGA supports one charity. A CRT can name several.
• Payments: a CGA pays a fixed amount. A unitrust version of a CRT pays a percentage of a value that changes every year.

Gifts and IRA distributions count for 2026 only if they are completed by December 31. If you are weighing a charitable gift annuity against a commercial annuity this year, get the income figures for both before you decide.

Frequently Asked Questions