ABLE Accounts: Tax Rules for Saving for Disability Expenses
Published November 5, 2026
An ABLE account is a tax-favored savings account for a person with a disability or blindness. Money in the account can pay for qualified disability expenses. Earnings are not taxed as long as the money is used for those expenses. The account is generally not counted for SSI and certain other federal programs. IRS: Publication 907 (2025)
Who can open one
The blindness or disability must have started before age 26. That is the rule in Publication 907 for 2025. The person must also meet one of two tests. The first is that they receive Social Security disability or blindness benefits. The second is that they file a disability certification with their state's ABLE program, signed by a physician. Someone else can open the account if the person cannot. While they live, only the person with the disability can own an interest in the account. IRS: Publication 907 (2025)
A person can have only one ABLE account at a time, with some exceptions for rollovers and transfers. IRS: Publication 907 (2025)
Contribution limits
For 2025, total yearly contributions are limited to $19,000. That is the annual gift tax exclusion. An employed beneficiary may add more, up to the lesser of their pay for the year or $15,650 in the continental United States. Each state also sets a total account limit. A rollover from a 529 tuition account counts toward the yearly limit. Moves between ABLE accounts do not count toward it. IRS: Publication 907 (2025)
Excess contributions and their earnings should be returned by the return's due date. If they are not returned, a 6% excise tax applies. You report that on Form 5329, Part VIII. The ABLE program must notify you when it returns contributions. IRS: Publication 907 (2025)
Withdrawals
Withdrawals for qualified disability expenses are not taxed. Qualified expenses include education, housing, transportation, health, assistive technology, and funeral costs, among others. If the total withdrawn in a year is more than the qualified expenses for that year, the earnings part of the extra is taxable. A 10% additional tax applies to that taxable part. You figure it on Form 5329, Part II. Publication 907 includes a worked example that splits a withdrawal into taxable and nontaxable parts. IRS: Publication 907 (2025)
Forms you will see
- Form 5498-QA, which reports contributions, rollovers, and the account's fair market value. The ABLE program issues it each year.
- Form 1099-QA, which reports distributions from the account.
Keep both with your receipts for disability expenses. IRS: Publication 907 (2025)
Saver's credit
Some people who contribute to an ABLE account may also claim the saver's credit. The income limits and other rules are in Publication 907. Read Saver's Credit: who qualifies for the general rules. IRS: Publication 907 (2025)
If eligibility ends
If the beneficiary stops being an eligible individual, the account cannot accept new contributions starting the next year. The account is not treated as distributed for that reason. Withdrawals made while the person is not eligible are not for qualified expenses, so the earnings part may be taxable. IRS: Publication 907 (2025)
Moving the account
You can move an ABLE account to another state program through a rollover. Some programs also allow a direct transfer between programs. A rollover is not included in gross income when it meets the rules in Publication 907. Rollovers between ABLE accounts do not count toward the yearly contribution limit. IRS: Publication 907 (2025)
Steps to follow
- Confirm that the disability began before age 26, and that one of the two tests is met.
- Track contributions against the yearly limit, including any 529 rollover.
- Keep receipts for each qualified disability expense you pay from the account.
- Compare each Form 1099-QA with your withdrawals and receipts before you file.
General information, not advice for your situation.
Sources: Sources: IRS, Publication 907, Tax Highlights for Persons with Disabilities (2025) (https://www.irs.gov/pub/irs-pdf/p907.pdf) This is general information, not advice about your specific return.
