The Achieving Better Life Experience (ABLE) Act, which Congress passed in 2014, is designed to allow persons with disabilities to save funds for future needs in a tax-advantaged account while still maintaining their eligibility for certain means-tested public benefits programs. Recent legislation in the form of the One Big Beautiful Bill Act (OBBBA) and the ABLE Age Adjustment Act increases eligibility and expands contribution opportunities and incentives for individuals to utilize ABLE accounts.
Benefits of ABLE Accounts
Generally, ABLE account balances do not count as an asset for the purposes of mean-tested public benefits programs, such as Supplemental Security Income (SSI) and Medicaid. Up to $100,000 in an ABLE account is exempted from the asset limits for SSI, and an unlimited amount is exempted from the asset limits for Medicaid. These provisions allow individuals with disabilities to get the financial support they need through government programs while still being able to safeguard funds for additional future needs that current programs don’t cover.
Investments in ABLE accounts grow tax-free. All withdrawals for qualified expenses are tax-free, as well. Recent changes to ABLE accounts now will make this savings vehicle even more powerful over the next two years.
The One Big Beautiful Bill Act (OBBBA)
The OBBBA, which went into effect on July 4, 2025, increases the annual ABLE account contribution limit to $19,000. The legislation also makes the temporary ABLE-to-Work provision permanent. The ABLE-to-Work provisions, which was part of the Tax Cuts and Jobs Act of 2017, was due to expire on December 31, 2025. However, the OBBBA has made this provision permanent. As a result, individuals with disabilities who are employed can contribution additional funds beyond the regular annual limit to an ABLE account if they are not participating in a defined contribution retirement plan through their employer. Under this provision, eligible individuals can contribute up to the federal poverty level or their yearly earnings, whichever is less, to their ABLE accounts.
Furthermore, the OBBBA makes tax-free rollovers from Section 529 (college savings) accounts into ABLE accounts permanent. This provision allows parents to switch funds from 529 accounts to ABLE accounts without tax penalties if educational funds are no longer necessary or needed.
Finally, ABLE account contributions will count toward the Saver’s Credit established in the OBBBA. In 2027, the Saver’s Credit will increase, both in terms of maximum eligible contributions for the credit ($2,100) and the maximum amount of the credit ($1,050). The Saver’s Credit is an incentive for eligible individuals to contribute to an ABLE account.
The ABLE Age Adjustment Act
As of January 1, 2026, the ABLE Age Adjustment Act increases the eligibility age for ABLE accounts from 26 to 46. Previously, individuals were ineligible to establish an ABLE account unless they developed a disability before age 26. Now, all individuals who develop a disability before age 46 are eligible to establish an ABLE account.
In addition to meeting the age limit, individuals must have a severe disability that meets the criteria for disability established by the Social Security Administration (SSA). In other words, individuals must have significantly functional limitations that have lasted or are expected to last for at least one year. However, individuals need not ever have received any benefits from SSA based on their disabilities to be
Frequently Asked Questions
What types of expenses can ABLE account funds be used for?
ABLE account funds can be used for a wide range of “qualified disability expenses.” These include housing, education, transportation, healthcare, assistive technology, employment training, and other costs that improve quality of life. As long as the expense is related to maintaining or improving the health, independence, or well-being of the account holder, withdrawals remain tax-free.
How do ABLE accounts interact with other savings or benefits programs?
One of the biggest advantages of ABLE accounts is that they allow individuals with disabilities to save without jeopardizing eligibility for means-tested benefits like SSI and Medicaid. Up to $100,000 in an ABLE account is excluded from SSI asset limits, and Medicaid eligibility is not affected regardless of the account balance. ABLE accounts can also work alongside other savings tools, such as 529 plans, thanks to rollover provisions.
Who can open and manage an ABLE account?
An ABLE account can be opened by the eligible individual with a disability or by an authorized person acting on their behalf, such as a parent, guardian, or agent under a power of attorney. The account is always owned by the individual with the disability, but authorized representatives can help manage contributions, investments, and withdrawals to ensure compliance with program rules.
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