Got a disability that started before age 46? You may now qualify for a tax-free savings account

New law expands a key savings tool

A federal law that took effect Jan. 1, 2026, opened the door for about 6 million more Americans to save money through ABLE accounts.

ABLE stands for Achieving a Better Life Experience. These tax-advantaged accounts let people with disabilities save without losing most government benefits.

The ABLE Age Adjustment Act raised the qualifying age of disability onset from 26 to 46, a change that also covers about 1 million veterans.

It’s the biggest expansion since the program launched over a decade ago.

The old rule shut millions out

The original ABLE Act, passed in 2014, only covered people whose disability started before age 26. That left out millions who became disabled later in life through accidents, illness, or military service.

Think about it: the average enlisted service member medically retired for a disability is 34 years old. For officers, it’s 39.

Congress passed the fix as part of the SECURE 2.0 Act back in December 2022, but set the start date for Jan. 1, 2026.

These accounts protect benefits and savings

An ABLE account is a tax-advantaged savings account for people with qualifying disabilities. The money grows tax-free, and withdrawals are tax-free when used for qualified expenses.

Here’s why that matters: most government benefits programs, including Medicaid, don’t count ABLE funds as assets.

Without one of these accounts, people on Supplemental Security Income (SSI) can only have $2,000 in countable assets before they lose benefits.

That’s a razor-thin margin that ABLE accounts help people avoid.

Who qualifies under the new rules

Any U.S. citizen whose disability started before age 46 and is expected to last at least 12 months can qualify. Your current age doesn’t matter.

What counts is when the disability began. People already receiving SSI or Social Security Disability Insurance (SSDI) qualify automatically.

If you’re not on Social Security disability benefits, you can still qualify with a signed certification from a licensed physician.

You self-certify your eligibility during enrollment.

Savers can put away $20,000 a year

The 2026 annual contribution limit sits at about $20,000, based on the federal gift tax exclusion. Anyone can chip in, including family members, friends, and employers.

There’s also a bonus for workers: employed account holders who don’t participate in an employer retirement plan can save extra through the ABLE-to-Work provision.

Each person can only hold one ABLE account, though. That lets them add funds up to the federal poverty level or their earnings, whichever is less.

SSI and Medicaid treat ABLE funds differently

Up to $100,000 in an ABLE account doesn’t count against SSI’s $2,000 asset limit. If the balance climbs above $100,000, SSI cash benefits pause, but they don’t end.

Once the balance drops back down, benefits kick back in. Medicaid eligibility stays intact no matter how much is in the account.

Other programs like SNAP, HUD housing assistance, and FAFSA also ignore ABLE funds when counting assets.

The list of qualified expenses is broad

ABLE money can cover a wide range of disability-related costs. Housing tops the list, including rent, mortgage payments, and utilities.

Transportation counts too, from vehicle purchases and modifications to gas and public transit. Healthcare expenses, insurance premiums, and wellness costs all qualify.

Education spending from preschool through college is covered, including tuition, books, and supplies. Assistive technology, job training, legal fees, and even funeral and burial expenses round out the list.

Congress made key provisions permanent in 2025

The ABLE-to-Work provision, which lets employed account holders save beyond the standard yearly limit, was set to expire at the end of 2025.

The One Big Beautiful Bill Act, signed into law on July 4, 2025, made it permanent. Tax-free rollovers from 529 college savings plans into ABLE accounts also became permanent.

That same law locked in the Saver’s Credit, which gives eligible working account holders a tax credit for their contributions.

About 1 million veterans now qualify

Veterans stand to gain a lot from the expanded age limit.

Many service members become disabled after age 26 due to injuries from training or deployment. ABLE accounts protect access to VA disability benefits, VA pension benefits, and Medicaid.

Veterans can now save for assistive technology, housing modifications, healthcare, and other needs without putting their benefits at risk.

That’s a meaningful change for people who served.

Opening an account takes a few steps

Accounts open online through a state ABLE program.

You don’t have to use your home state’s program. Many states accept out-of-state residents, so you can shop around.

Each state program differs in fees, investment options, and account limits, which range from about $235,000 to over $596,000.

If someone can’t manage the account themselves, a parent, guardian, spouse, or other authorized legal representative can open and run it on their behalf.

Watch out for a few important rules

Account holders should keep receipts for every withdrawal in case the IRS comes knocking.

Money pulled out for non-qualified expenses gets hit with income tax on the earnings plus a 10% federal penalty. Those withdrawals may also count against eligibility for benefits like SSI.

One more thing to know: housing-related withdrawals must be spent in the same month they come out. Otherwise, SSI may count them as resources.

This savings tool took a decade to get here

The original ABLE Act became law on Dec. 19, 2014.

As of late September 2025, more than 223,000 ABLE accounts held about $2.87 billion in assets nationwide. The age expansion marks the largest eligibility change since the program started.

Disability advocates and lawmakers from both parties pushed for this fix for years, calling it a step toward financial fairness for people with disabilities.

Now, millions more can finally use it.

This article was created with AI assistance and human editing.

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