In July, the 2025 Reconciliation Bill passed. There’s… a lot….in this bill.
Before we get into ABLE account changes, I want to preface this article by stating very clearly that this bill was not a win for the disability community. It was actively harmful. And it’s just one prong of the multitude of actively harmful things that have been implemented in recent months.
Fund your friends’ ABLE accounts.
Things are about to get heavy.
Here’s a timeline from The Arc outlining exactly when and how some of the changes in this bill will affect people in the disability community:
That said, thanks to tireless advocacy efforts over the course of the past eight years, there were some positive changes in the bill for ABLE accounts. It’s good to be aware of them, even if everything else is overwhelmingly bad.
NOTE: Are you disabled, or do you have a disabled family member? The Plutus Foundation has generously sponsored a grant to offer you free DISABILIFINANCE education courses — including one on ABLE accounts. Check out the details to claim your free ticket today.
Effective Jan. 1, 2026: You may be newly eligible for an ABLE account.
ABLE accounts allow you to shelter assets from programs like SSI and Medicaid. They also allow you to invest money without paying taxes on the gains — as long as you spend the proceeds on qualified disability expenses. While you should always read your state’s disclosure agreement, on the whole, most life expenses from medical needs to housing to food to vacations count as disability expenses when you are a disabled person.
This first “change” we’re going to cover isn’t one that was included in the Reconciliation Bill. But it is one that isn’t getting enough media attention, so I want to talk to you about it off the top.
Thanks to SECURE 2.0 which passed in 2022, the eligibility age for ABLE accounts is going up. It used to be that you could only open an ABLE account if you were under age 26 at the time of onset of your disability. This left out more than half of the disabled people in America.
But effective January 1, 2026, the age is going up from 26 to 46. Six to eight million people will be newly-eligible when the calendar turns. Among them about 1 million veterans.
If an ABLE account would help you but you haven’t qualified in the past due to the age restriction, this is a date you’ll want to circle.
ABLE to Work is Now Permanent
Okay. From here on out, we’ll be talking about changes from the 2025 Reconciliation Bill.
Usually, you’re allowed to contribute the equivalent of the gift tax exemption to your ABLE account in any given year. In 2025, the max contribution is $19,000.
ABLE to Work is a program which allows certain disabled people who work to contribute extra. The exact amount varies by state, but is tied to the Federal Poverty Line. For those who qualify, this nearly doubles the maximum contribution in any given year.
ABLE to Work was set to sunset at the end of 2025. However, the Reconciliation Bill made it a permanent program — no more expiration dates.
Savers’ Credit/Match Mess
Prior to this bill’s passage, you were allowed to claim the Savers’ Credit if you contributed to your own ABLE account in your own name. This allowance was set to expire at the end of 2025.
Simultaneously, the Savers’ Credit was set to be phased out for everybody. Starting in 2027, the Savers’ Credit will turn into a Savers’ Match. The same type of algorithmic formula will be applied, determining the percentage of your credit/match in accordance with your income.
But instead of getting a tax deduction for contributions to eligible accounts, moving forward the government will ‘match’ a percentage of your contribution by depositing the match directly into the account in question.
The Reconciliation Bill extended Savers’ Credit eligibility for ABLE accounts, and made them permanently eligible for the upcoming Savers’ Match program.
529 to ABLE account rollovers made permanent
Another provision that was set to expire at the end of 2025 was 529 to ABLE account rollovers. The ability to rollover these accounts is a big deal as not all disabilities are diagnosed at birth. You might open up a 529 account to save for your child’s college education while they’re an infant.
Then comes the diagnosis. Maybe that diagnosis means college isn’t as clear-cut of a path forward as you previously thought. (Though, just as likely, maybe it doesn’t take it off the table, either.)
But it probably definitely means that you have medical and other expenses in the here and now that you weren’t counting on. If the money’s locked away in a traditional 529 account, it’s going to be hard to access for disability expenses without incurring tax consequences.
If you roll that 529 over into an ABLE account, though? That frees up the money to spend on college or whatever else your child may need — whether that’s in young adulthood or in the here-and-now. And it allows you spend on any number of life expenses without incurring those tax penalties upon withdrawal.
The Reconciliation Bill made these rollovers permanently permissible. The December 31, 2025 expiration date is gone.
Marginal Increases to Contribution Limits
There’s language in the Reconciliation Bill that would marginally increase the standard annual contribution limit to an ABLE account to something slightly higher than the gift tax exemption in future years. It’s a complicated formula based on a change in inflation-year calculations.
We haven’t seen this formula implemented yet, and it’s complicated enough that explaining it is likely to cause more confusion than clarity.
The takeaway here is that you might be able to contribute an itsy-bitsy bit more moving forward, but it’s unlikely to be an amount that’s life-altering.
Trump Account to ABLE Rollovers
The Reconciliation Bill also created a new type of account — a Trump Account. The tax advantages look minimal to non-existent. From what I know at this point in time, I wouldn’t be super enthusiastic about pouring money into one of them myself when there are so many better options available.
Their big selling point, it appears, is a birthing incentive. Which could be a whole other article. But for children born in 2025 through 2028, the government will fund the account with $1,000. For most American families, this would barely put a dent in the labor and delivery bill the hospital sends you after giving birth.
It looks like it’s going to be really, really difficult to get that money out without incurring some type of penalty. If the child ends up having an ABLE account, though, you will be able to roll the Trump Account balance over. Because you’re able to withdraw money from ABLE accounts tax-free in so many instances, at this point it appears that having this rollover ability will be an advantage.
An advantage on a $1,000 balance. But an advantage, nonetheless.
Where to learn more about ABLE accounts
When I write about ABLE accounts, I often find myself consulting the brilliant Paul Curley of ISS Marketing. Such was the case when I dove in to decipher all the legal language in this latest bill.
Paul also runs the 529 Conference, and is the data wizard when it comes to all things ABLE and traditional 529. To follow all the latest legislative and statistical data about ABLE accounts, I highly recommend his newsletter.
If you’re interested in opening an ABLE account — whether you’re newly eligible with the age expansion or just haven’t made the jump yet — two great resources are the National Association of State Treasurers ABLE Today website and the ABLE National Resource Center.
And, of course, if you’re interested in getting a free ABLE training course from DISABILIFINANCE, do get in touch.