ABLE Accounts: 2025 and 2026 Updates Explained
Annual Contribution Limits
For 2025, the total annual contribution amount to an ABLE account is $19,000. This amount reflects the federal annual gift tax exclusion, as ABLE account contribution limits have historically been tied to that exclusion. Because of this connection, the annual contribution limit has been subject to change from year to year, indexed to inflation.
Beginning in 2026, this will change.
Under the One Big Beautiful Bill Act (OBBBA), the method for setting ABLE contribution limits is no longer the same as the federal gift tax exclusion. Instead, ABLE accounts in 2026 will have an annual contribution limit of $20,000, even though the federal gift tax exclusion amount for 2026 is $19,000.
Contributions to an ABLE account may come from the disabled individual, parents, grandparents, other family members, inheritances, special needs trusts, estates, partnerships, companies, corporations, child support, or other sources. The total annual contribution limit cannot be exceeded, regardless of how many sources contribute.
What Is an ABLE Account?
The Stephen Beck, Jr., Achieving a Better Life Experience (ABLE) Act is a federal law enacted in December 2014 that authorized each state to establish an ABLE program. These programs offer tax advantaged savings and investment options designed to help individuals with disabilities, and their families, save private funds to support health, independence, and quality of life.
The ABLE Act modified the Internal Revenue Code to create tax advantaged savings accounts that do not impact eligibility for means tested public benefits such as Supplemental Security Income (SSI) and state Medicaid. For the first time, individuals with disabilities were given the ability to save money and maintain a supplemental source of income beyond programs such as SSI, Housing and Urban Development (HUD), Supplemental Nutrition Assistance Program (SNAP), and state based Medicaid waiver programs.
ABLE accounts function similarly to a 529 college savings plan, but are specifically designed for individuals with disabilities. They provide an opportunity to save and invest for the future without jeopardizing access to vital public benefits where income and asset limits are strictly enforced. Funds contributed to an ABLE account are generally disregarded when determining eligibility for federal benefit programs such as SSI and Medicaid.
Who May Have an ABLE Account?
ABLE accounts are created by or for the benefit of a disabled individual, referred to as the Beneficiary. For accounts established through 2025, the Beneficiary must have experienced the onset of the disability prior to age 26.
Beginning in 2026, this eligibility requirement will expand.
Under changes enacted by the OBBBA, individuals whose disability manifested prior to age 46 will be eligible to establish and fund an ABLE account. This expansion significantly increases access to ABLE accounts for individuals with later onset disabilities.
The owner and Beneficiary of the ABLE account is the disabled individual. An ABLE account may be established by the individual, a parent, or a legal guardian. A Beneficiary may have only one ABLE account at any given time.
What May ABLE Funds Be Spent On?
Funds in an ABLE account may be used for Qualified Disability Expenses. These expenses must relate to the individual’s disability or blindness and must help maintain or improve the Beneficiary’s health, independence, or quality of life.
Qualified Disability Expenses include, but are not limited to:
- Health and wellness expenses
- Education and training
- Housing and transportation
- Legal fees and financial management
- Employment training and support
- Assistive technology and personal support services
- Oversight and monitoring
- Funeral and burial expenses
- Other expenses approved by Treasury regulations
If an expense benefits the Beneficiary and supports their health, independence, or quality of life, it may qualify as a Qualified Disability Expense.
Who May Contribute to an ABLE Account?
Contributions to an ABLE account may be made by any individual or entity, including the disabled Beneficiary. Contributions are made with after tax dollars. Earnings on the account may grow tax free, depending on the investment options available through the state based ABLE program.
Withdrawals used for Qualified Disability Expenses are considered tax free distributions.
How Much Money Can Accrue Without Impacting Government Benefits?
Under federal law, if the balance in an ABLE account exceeds $100,000, the Beneficiary’s Supplemental Security Income (SSI) benefits will be suspended for as long as the excess funds remain in the account.
Medicaid eligibility has a much higher allowable balance and varies by state. In Florida, the current ABLE account balance limit is $418,000, at which point Medicaid eligibility may be affected.
