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Achieving a Better Life Experience (“ABLE”) accounts are tax-advantaged savings accounts for individuals with disabilities.  These accounts were first created nationally in 2014, and New Jersey ABLE accounts became available in 2017.  Home | NJ ABLE.

ABLE accounts allow eligible disabled individuals to save and invest money without jeopardizing their eligibility for public benefits such as Medicaid and Supplemental Security Income. The contributions can be made by the disabled individual or anyone on his or her behalf.  NJ ABLE and its Benefits

These ABLE accounts are a companion to establishing first or third party special needs trusts, but not a replacement for special needs planning.

ABLE accounts offer greater flexibility in the expenses that may be paid when compared to the restrictions of a special needs trust. By way of example, rent may be paid from an ABLE account. SSA – POMS: SI 01130.740 – Achieving a Better Life Experience (ABLE) Accounts – 01/03/2025.

However, ABLE accounts are subject to estate recovery in New Jersey, whereas third party special needs trusts are not.  Estate recovery is the process of recovering assets from a deceased beneficiary who received certain means tested public benefits after age 55. The_NJ_Medicaid_Program_and_Estate_Recovery_What_You_Should_Know.pdf

Beginning in January 2026, those with a disability that began before age 46 can open an ABLE account, which was passed as part of the consolidated appropriations act of 2023, which takes effect on January 1, 2026.

In addition, the One Big Beautiful Bill (P.L.119-21) made certain provisions permanent which were previously passed into law under the Tax Cuts and Jobs Act of 2017, in addition to some enhancements to the accounts.  Those provisions are summarized below.

The permitted annual contribution amount to an ABLE account is currently based on the gift-tax exclusion amount (in most states including New Jersey), which will remain $19,000 in 2026 for all New Jersey ABLE Accounts. Home | NJ ABLE This contribution amount is a total amount that may be contributed to the ALBE account from all sources.

In addition, for those individuals who are also employed and using ABLE accounts, an additional amount may be contributed. The additional amount will be the lesser of two calculations: (1) the applicable federal poverty level in the prior year for a one-person household or (2) the beneficiary’s compensation for the year.  The applicable federal poverty level for a one-person household for 2025 is $15,560 for residents in the continental U.S., $19,550 in Alaska, and $17,990 in Hawaii.  Health and Human Services provides the amounts each year. See detailed-guidelines-2025.pdf. Inflation adjustments will be made for the year 2026 as an enhancement to the accounts.

In addition, the Savers Credit for ABLE accounts was extended. The Savers Credit is a tax credit on contributions deposited and saved in ABLE. This is designed to encourage individuals to save for their future while reducing their federal income tax liability. The credit is now permanent. However, the annual contribution increase for the Savers Credit does not take effect until tax year 2027, which increases the eligible amount for saving from $2,000 to $2,100 with a maximum tax credit of $1050 as determined by the adjusted gross income of the individual. Tax provisions in the One Big Beautiful Bill Act.

Finally, the provision is now permanent, which allows assets from a 529 savings account may be rolled over into an ABLE account of the 529 plan’s designated beneficiary or their family member. The rollovers are not subject to income tax if the amounts do not exceed the ABLE contribution limits as described above.  Text – H.R.1 – 119th Congress (2025-2026): An act to provide for reconciliation pursuant to title II of H. Con. Res. 14. | Congress.gov | Library of Congress.

In sum, the extensions and enhancements to ABLE accounts provide additional tools for special needs planning.