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ABLE accounts - Tax benefit for people with disabilities

 

The Achieving a Better Life Experience (ABLE) Act of 2014 allows states to create tax-advantaged savings programs for eligible people with disabilities (designated beneficiaries). Funds from these 529A ABLE accounts can help designated beneficiaries pay for qualified disability expenses. Distributions are tax-free if used for qualified disability expenses.

Eligibility for an ABLE account

You may be eligible to establish an ABLE account if your blindness or disability began before age 46. The Secure 2.0 Act of 2022 increased the age limit from age 26 to age 46 beginning in 2026. See Publication 907, Tax Highlights for Persons with Disabilities PDF, for more information.

ABLE Account Contribution Limits

For 2026, total annual contributions to an ABLE account are generally limited to $20,000. See Publication 907, Tax Highlights for Persons with Disabilities PDF, for more information about contribution limits. 

In addition, a designated beneficiary who works may contribute an additional amount up to the lesser of the beneficiary’s compensation for the tax year or the applicable poverty line amount for a one-person household. A designated beneficiary can’t contribute this additional amount if his or her employer made a contribution for him or her to a:

  • 401(a) defined contribution plan or 403(a) annuity contract
  • 403(b) annuity contract
  • 457(b) eligible deferred compensation plan

Saver’s Credit for ABLE Contributions

An ABLE account’s designated beneficiary may be eligible to claim the Saver’s Credit for contributions they make to their ABLE account. See Publication 907, Tax Highlights for Persons with Disabilities PDF, for eligibility requirements and other limitations.

Rollovers from 529 Plans

Funds from a designated beneficiary’s qualified tuition program (also known as a 529 plan) may be rolled into an ABLE account of the designated beneficiary or a member of their family. The permissible rollover is limited in amount.

Working Families Tax Cuts

The Working Families Tax Cuts made permanent several ABLE account provisions that were previously scheduled to expire after 2025. Specifically, the law permanently extended: 

  1. the increased contribution limit available to certain employed designated beneficiaries, 
  2. the Saver's Credit for eligible contributions to ABLE accounts, with the maximum contribution amount used to calculate the credit increasing from $2,000 to $2,100 beginning in 2027, and 
  3. the ability to make tax-free rollovers from qualified tuition programs (529 plans) to ABLE accounts, subject to applicable requirements and limitations. 

The law also changed how the annual ABLE account contribution limit is adjusted for inflation. As a result, the annual contribution limit increased from $19,000 in 2025 to $20,000 in 2026.

More information

Guidance

Forms

ABLE programs use Form 1099-QA, Distributions from ABLE Accounts, and Form 5498-QA, ABLE Account Contribution Information, to report relevant account information annually to designated beneficiaries and the IRS. Instructions are available for both forms.