Millions of People Just Became Eligible For This Tax-Advantaged Savings Account

Starting this year, approximately 6 million more people with disabilities became eligible for ABLE accounts, a type of tax-advantaged account available to individuals with disabilities, according to the National Disability Institute.

Previously, individuals were only eligible for this account if their disability began before the age of 26. However, eligibility requirements expanded on Jan. 1, so that individuals who become disabled before the age of 46 now also qualify.

With an ABLE account, investments grow tax-free, and funds can be used tax-free for qualified disability expenses, including transportation, food, education, health care, and more.

Here’s what you need to know.

How Do These Accounts Work?

It’s up to you how you plan to use your ABLE account funds: you can leave the money in cash or invest it. When you’re ready to spend the money, use it to pay for qualified expenses; otherwise, you may be subject to tax and a 10% penalty on your withdrawal.

Plus, assets worth up to $100,000 in the account won’t stop you from being eligible for Supplemental Social Security Income (SSI), a program that provides cash payments to select disabled and older individuals.

Generally, in order to be eligible for SSI, an individual must have assets worth less than $2,000. However, an individual can have up to $100,000 in an ABLE account without it counting toward that $2,000 threshold.

Additionally, funds in an ABLE account won’t affect your eligibility for other programs like Medicaid, Medicare, SNAP, and more.

For 2026, the annual contribution limit is $20,000. Individuals who work and don’t have access to a workplace retirement plan can contribute up to an additional $15,560, but residents of Alaska and Hawaii are eligible to contribute more.

Anyone can contribute to an ABLE account, including parents, friends, and employers.

Who Is Eligible For An ABLE Account?

To qualify for an ABLE account, you must have experienced your disability before age 46.

You may be eligible if you’re already receiving SSI or disability insurance benefits, or if you have a disability certification that indicates you have ‘severe functional limitations’ due to your disability.

ABLE accounts are administered by states. According to the National Disability Institute, nearly all states offer ABLE accounts, with the exception of four states (Idaho, North Dakota, South Dakota, and Wisconsin).

Some ABLE programs allow out-of-state residents to open accounts. However, since some states offer a state income tax deduction, check with your state’s program before opting for an out-of-state administrator.