The Internal Revenue Service (IRS) has issued Notice 2024-40, which adjusts various tax-related figures annually for inflation. These adjustments, which take effect on January 1, 2025, include the limits on contributions to ABLE accounts for 2025. The amount of money you can contribute to an ABLE account is the same as that of the annual gift tax exclusion or the amount you can give another person without incurring gift taxes.
In 2025, the annual gift tax exclusion will increase to $19,000, up from $18,000 in 2024. As a result, people with disabilities or their family members can contribute up to $19,000 per year to ABLE accounts.
Additionally, suppose the beneficiary of an ABLE account has a job, and their employer is not contributing to a qualified retirement plan for the individual. In that case, they can contribute an additional amount to their ABLE account. This amount is limited to the amount of the individual’s annual gross income or the individual’s federal poverty level (FPL), whichever is less. An individual’s FPL for 2024 is $14,580 in all states except for Hawaii ($16,770) and Alaska ($18,210). The U.S. Department of Health and Human Services (HHS) annually updates the FPL figures but has yet to release updated FPL figures for 2025 as of this date.
ABLE accounts allow individuals with disabilities to save for the future without endangering their eligibility for important public benefits, such as Supplemental Security Income (SSI) and Medicaid. These government programs limit the resources that individuals can own and remain eligible for their benefits. Generally, ABLE accounts containing up to $100,000 do not count toward those resource limits, which are quite low. For instance, an individual typically may not have more than $2,000 in resources to remain eligible for SSI.
Contact Us Today for Help with Your ABLE Account
Rubin Law is the only Illinois law firm to dedicate itself exclusively to providing compassionate legal services for children and adults with special needs. We offer unique legal and future planning techniques to meet your family’s individual needs.
Call us today at 866-TO-RUBIN or email us at email@rubinlaw.com to learn more about the services we can offer you and your family.
