On July 4, 2025, the “One Big Beautiful Bill Act (OBBBA)” was signed into law, making important changes to many of the tax transfer laws in the U.S. Provisions of the OBBBA also impact ABLE accounts which are frequently found in a special needs planning component of a comprehensive estate plan. To help ensure that your plan is up to date and your special needs beneficiaries ae protected, the Los Angeles attorneys at Schomer Law Group, APC explain how the OBBBA impacts ABLE accounts.
What Is an ABLE Account?
An ABLE account is a special savings tool created for individuals living with disabilities. Established under the Achieving a Better Life Experience (ABLE) Act of 2014, these accounts allow people to set aside money for disability-related costs without losing eligibility for important public benefits. One of the greatest advantages of an ABLE account is that funds spent on approved Qualified Disability Expenses (QDEs) do not interfere with Supplemental Security Income (SSI) or Medicaid eligibility, provided the money is used during the same month in which it is withdrawn.
Understanding Qualified Disability Expenses (QDEs)
Money saved in an ABLE account must be directed toward Qualified Disability Expenses. QDEs are defined broadly by the Internal Revenue Service (IRS) and are intended to improve health, independence, or quality of life. While not every possible cost is listed, the categories below represent common examples of how these funds can be used:
- Transportation: Whether purchasing a wheelchair-accessible vehicle, paying for bus passes, or covering the cost of specialized transportation services, these expenses are allowed.
- Assistive Technology and Caregiving: Communication devices, mobility aids, home health aides, respite care, or other personal assistance services may be paid for with ABLE resources.
- Employment Support: Individuals entering or staying in the workforce can use funds for job coaching, training, counseling, adaptive devices, or costs associated with launching a small business.
- Housing and Daily Living Costs: This may include rent or mortgage payments, property taxes, utilities, or modifications needed to make a home accessible.
- Education and Training: Funds may cover tuition, books, school supplies, fees, tutoring, or specialized learning equipment. Whether attending a university or pursuing vocational training, these expenses qualify.
- Health and Medical Needs: Doctor visits, therapies, medication, durable medical equipment, dental care, vision services, mental health treatment, and even alternative therapies designed to improve well-being can be paid for with ABLE account funds.
- Legal and Financial Services: Attorney fees, the cost of preparing estate planning documents, representation in disability-related cases, and hiring a financial advisor to help manage funds all qualify.
OBBBA and the ABLE Age Adjustment Act
In recent years, important legislation has expanded and strengthened the benefits of ABLE accounts. The passage of the One Big Beautiful Bill Act (OBBBA) in 2025 and the ABLE Age Adjustment Act mark significant milestones in disability law since the 1990 Americans with Disabilities Act. These changes will make ABLE accounts more accessible and beneficial for beneficiaries with special needs.
Enhancements Under the OBBBA
If you have a child or other loved one who has special needs, an ABLE account can help you provide financial assistance to that beneficiary without impacting their eligibility for much-needed government assistance programs. When the OBBBA was signed into law, several key changes that impact ABLE accounts took effect immediately, such as:
- ABLE-to-Work: The ABLE-to-Work provision was made permanent, allowing working individuals with disabilities to deposit more money into their ABLE accounts beyond the annual $19,000 contribution limit. ABLE account beneficiaries can now deposit up to the federal poverty level or their earnings for the year (whichever is lower), provided they are not contributing to a retirement plan.
- 529 Plans: Tax-free rollovers from 529 education savings plans into ABLE accounts were also made permanent, providing flexibility if educational savings are no longer required.
- Saver’s Credit: Contributions to ABLE accounts are now eligible for the Saver’s Credit, a federal tax credit designed to encourage lower-income individuals to save. In 2027, the Saver’s Credit becomes even more generous when the maximum contribution eligible for the credit will increase to $2,100 and the maximum credit itself will rise to $1,050.
- Expanding Eligibility: Beginning January 1, 2026, the ABLE Age Adjustment Act will increase the age of onset for qualifying disabilities. Historically, eligibility was limited to those whose disability began before the age of 26 but under the new law, the threshold rises to age 46, dramatically broadening access to ABLE accounts for people who develop disabilities later in life. Adults living with conditions such as chronic illnesses, mental health disorders, or injuries acquired in adulthood will now be able to take advantage of these accounts.
Do You Have Specific Questions about How the OBBBA Impacts an ABLE Account?
For more information, please join us for an upcoming FREE seminar. If you have specific questions or concerns about how the OBBBA impacts an ABLE account, contact the experienced Los Angeles special needs planning attorneys at Schomer Law Group APC by calling (310) 337-7696 to schedule an appointment.
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