Many people are familiar with Section 529 plans as a tax-advantaged way to save for education. Fewer realize there’s a similar option designed specifically to help individuals with disabilities save for qualified expenses. These are known as Achieving a Better Life Experience (ABLE) accounts.
Recent legislation has expanded and strengthened ABLE accounts. The SECURE 2.0 Act, enacted in 2022, broadens eligibility beginning in 2026, while the One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, made several favorable provisions permanent.
Key Benefits of ABLE Accounts
ABLE accounts can be established by:
- Eligible individuals for their own benefit
- Family members supporting a dependent
- Legal guardians acting on behalf of someone in their care
Anyone—friends, relatives, or others—can contribute to an ABLE account.
Tax advantages
Although contributions aren’t tax-deductible, ABLE accounts offer several tax benefits:
- Funds grow tax-deferred
- Withdrawals used for qualified disability expenses are tax-free
- Nonqualified withdrawals are subject to income tax on earnings plus a 10% penalty
Saver’s credit made permanent
Under the OBBBA, eligible beneficiaries can permanently claim the Saver’s Credit for contributions they personally make to their ABLE accounts. For 2025 and 2026, the maximum Saver’s Credit is $1,000 per individual.
Impact on government benefits
In most cases, an ABLE account won’t jeopardize eligibility for government assistance:
- No effect on Social Security Disability Insurance (SSDI)
- No impact on Medicaid eligibility
However, balances over $100,000 are counted toward the Supplemental Security Income (SSI) resource limit. If an ABLE account exceeds $102,000 (assuming no other assets), SSI payments are suspended—not terminated. In addition, ABLE distributions used for housing expenses count toward SSI income limits.
Expanded ABLE Account Eligibility in 2026
To qualify for an ABLE account, an individual must be blind or disabled.
Age-of-onset change
- Through 2025: Disability must have occurred before age 26
- Starting January 1, 2026: The age threshold increases to 46
This change significantly expands access for individuals who became disabled later in life.
Other eligibility requirements
Typically, individuals must qualify for SSI or SSDI benefits. Alternatively, eligibility can be established by filing a disability certification with the IRS.
Qualified Disability Expenses
ABLE account withdrawals remain tax-free when used for expenses that support the beneficiary’s health, independence, or quality of life.
Common qualified expenses include:
- Education
- Housing
- Transportation
- Health and wellness costs
- Assistive technology
- Personal support services
- Employment-related support expenses
How to Set Up an ABLE Account
ABLE accounts are administered through state-sponsored programs, similar to 529 plans. Participants aren’t limited to their home state and may open an account elsewhere if the program allows nonresidents.
Investment flexibility and limits
- Funds can be invested in various options
- Investment selections can be changed up to twice per year
- Each eligible individual may have only one ABLE account
Contribution limits
- 2025 limit: $19,000
- 2026 limit: $20,000
The OBBBA permanently allows penalty-free rollovers from 529 plans into ABLE accounts, provided the ABLE account belongs to the 529 beneficiary or a qualifying family member. Rolled-over amounts count toward annual contribution limits.
If the beneficiary is employed, additional contributions may be allowed—up to the poverty-line amount for a one-person household.
A New Planning Opportunity for Families
For individuals who became blind or disabled after age 26 but before age 46, the 2026 expansion of ABLE eligibility opens the door to meaningful, tax-advantaged savings. These accounts can play an important role in long-term financial and benefits planning.
To understand how ABLE accounts fit into your broader tax and financial strategy, professional guidance can help ensure you make the most of these opportunities.