ABLE Account Updates in the 2025 Tax Bill

What “One Big Beautiful Bill” Means for ABLE Accounts

Congress is moving forward with a new tax bill packed with big updates—and ABLE
accounts are on the menu of items being effected by these updates. For families and
individuals who rely on these savings accounts to plan for a financially secure life with a
disability, the proposed changes will likely be beneficial. Here’s a look at what’s included
and what it could mean for your future.

1. Permanently Higher Contribution Limits
   One of the most important features of ABLE accounts is the ability to save money without
   losing access to critical benefits like Medicaid or SSI. In recent years, individuals with
   disabilities who work could make contributions above the usual annual limit (which
   matches the annual gift tax exclusion). For example, under the current law in 2025, one may
   contribute nearly $32,000; However, if the higher contribution limit is not extended in 2026
   and beyond individuals will only be able to contribute up to the gift tax exclusion which for
   2025 is $18,000.

What’s Changing (Section 110015):

• The new bill removes the 2026 expiration date and makes the higher contribution limit
  permanent.
• It also tweaks the inflation adjustment formula. Going forward, it will use 1996 as the base
  year instead of 1997 for Section 2503(b), which governs the gift tax exclusion. This means
  annual contribution limits have potential to grow more over time.

2. Saver’s Credit Extended to ABLE Contributions
   The Saver’s Credit is a helpful tax credit for lower- and middle-income individuals who save
   for retirement. A few years ago, Congress allowed ABLE account contributions to count for
   the Saver’s Credit—but only temporarily.

What’s Changing (Section 110016):

• ABLE contributions now permanently count toward the Saver’s Credit.
• This gives eligible ABLE account holders a tax break of up to $1,000 (or $2,000 for joint
  filers) just for saving.
  Real-World Example: A working ABLE account holder earning less than $20,000 could save
  $1,000 in their ABLE account and receive a $500 credit at tax time—essentially, free money
  for saving.

3. Rollovers from 529 Plans to ABLE Accounts Made Permanent

Many families save for college using 529 plans. But if a child later qualifies for an ABLE
account, there’s been a helpful option: roll over unused 529 funds into an ABLE account
without paying taxes or penalties.

This option was set to expire after 2025.

What’s Changing (Section 110017):

• The bill removes the expiration date, making this tax-free rollover option permanent.
  Real-World Example: A parent saved $15,000 in a 529 plan for their child, but after the
  child received a scholarship, that money wasn’t needed for tuition. Now, those funds can be
  moved directly into the child’s ABLE account tax-free and help with housing, transportation,
  or medical expenses.

Final Thoughts

While this bill is now being taken up by the senate and there are potential modifications
that will be made if the bill is to pass and be signed by the president, the bill in it’s current
form makes permanent several provisions of the tax law surrounding able accounts that are
set to expire in 2026. The changes proposed to the bill are generally beneficial to ABLE
account holders; However, we realize that ABLE account changes are a small portion of the
changes proposed in this large sweeping piece of legislation, others of which could be less
beneficial to blind people. As such, this article is limited in scope to provide awareness to
our members and followers about the updates being proposed to ABLE accounts. Our team
will continue to keep you updated to any additional proposed changes to ABLE accounts we
become aware of as the bill works its way through congress.

This article is provided for informational purposes only and is not intended to constitute tax
advice. Pursuant to U.S. Treasury Department Regulations (Circular 230), any tax
information contained in this communication is not intended or written to be used, and
cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed
under federal tax law. Readers should consult a qualified tax professional regarding their
individual tax situation.