The IRS informed taxpayers that Achieving a Better Life Experience (ABLE) accounts allow individuals with disabilities and their families to save for qualified expenses without affecting eligibility for government assistance programs. These tax-advantaged accounts can be used to cover essential costs such as education, housing, healthcare, and other disability-related expenses.
For 2025, the annual contribution limit is $19,000, with certain employed beneficiaries eligible to contribute additional amounts based on their earnings. The IRS also reminded taxpayers that ABLE account holders may qualify for the Saver’s Credit, a non-refundable tax credit that offsets a portion of their contributions. Eligible taxpayers can claim this credit using Form 8880. Additionally, families may roll over funds from a Section 529 plan into an ABLE account for the same beneficiary or a qualifying family member, subject to the annual contribution limit.
While ABLE contributions are not deductible for federal tax purposes, withdrawals remain tax-free if used for qualified disability expenses. The IRS emphasized that states administer ABLE programs, and eligibility is generally limited to individuals who became disabled before age 26. Taxpayers seeking further guidance can refer to Publication 907, Tax Highlights for Persons with Disabilities.
