The One Big Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025, ushering in one of the most comprehensive reforms to tax and transfer laws in decades. Although much of the discussion surrounding the new law has centered on changes to estate and gift taxes, an equally important feature of the OBBBA is its impact on Achieving a Better Life Experience (ABLE) accounts. For families who have a member with special needs, these accounts are frequently an essential planning tool within a special needs component of their comprehensive estate plans. Provisions within the OBBBA bring permanent improvements and new opportunities that can dramatically affect how ABLE accounts are opened, funded, and used to support long-term needs. To help you understand the new changes, the attorneys at Legacy Care Law Firm provide an overview of ABLE accounts and discuss how the OBBBA reshapes their role in special needs and estate planning for New Hampshire residents.
What an ABLE Account Is and Why It Matters
An Achieving a Better Life Experience account, better known as an ABLE account, is a specialized savings and investment vehicle created under federal legislation in 2014. It was designed for people living with disabilities to save money without losing eligibility for means-tested programs such as Medicaid or Supplemental Security Income (SSI). Traditionally, individuals who accumulated more than $2,000 in personal assets risked losing crucial benefits; however, the ABLE Act provided a solution by allowing funds in these accounts to be excluded from those resource limits if used for approved purposes.
Money placed in an ABLE account grows tax-deferred, and withdrawals for qualifying expenses are free from federal income tax. The account can be managed either by the individual with a disability or by an authorized representative, giving families flexibility in oversight. This arrangement not only promotes financial independence but also gives people with disabilities access to resources that improve daily life beyond what public benefits alone provide.
A defining feature of ABLE accounts is that withdrawals must be used for Qualified Disability Expenses (QDEs). The Internal Revenue Service (IRS) interprets this concept broadly, recognizing that people with disabilities have diverse needs that evolve over time. QDEs are not limited to medical treatments but encompass nearly any cost that improves health, independence, or quality of life. The ability to use the account funds for such a wide array of purposes makes ABLE accounts an extremely versatile special needs planning tool.
How the OBBBA Changes ABLE Accounts
The OBBBA builds on earlier reforms, including the ABLE Age Adjustment Act, and represents the most sweeping update to disability-related savings law since the Americans with Disabilities Act of 1990. For New Hampshire families, the law brings four particularly significant changes, including:
- Expansion of Eligibility through the ABLE Age Adjustment Act: Perhaps the most transformative change is the broadened eligibility criteria. Historically, only people whose disability began before age 26 could open an ABLE account. Effective January 1, 2026, the qualifying age threshold will increase to 46. This expansion dramatically enlarges the pool of eligible individuals. Adults who develop disabilities later in life, whether through chronic illnesses such as multiple sclerosis, injuries sustained in accidents, or the onset of mental health conditions, will now have access to ABLE accounts. For individuals who become disabled during adulthood this change offers a long-awaited opportunity to save without jeopardizing essential benefits.
- Permanent Extension of ABLE-to-Work: Before the OBBBA, working beneficiaries were able to contribute more than the standard annual limit ($19,000 as of 2025) to their ABLE accounts under a temporary provision known as ABLE-to-Work, but that rule was set to expire. The OBBBA eliminates the expiration date, making the ABLE-to-Work program a permanent feature. Under ABLE-to-Work, a beneficiary who is employed can contribute additional funds equal to their wages or the federal poverty line, whichever is lower, as long as they are not also contributing to a workplace retirement plan. In practice, this means that individuals with disabilities who hold jobs now have a lasting opportunity to set aside more savings without losing eligibility for critical public benefits.
- Permanent 529 Rollover Flexibility: Many families begin saving for education through a 529 college savings plan. If circumstances change and the student does not use all those funds, families often face difficult choices about what to do with the leftover money. Under prior law, limited rollovers to ABLE accounts were allowed, but the provision was temporary. The OBBBA makes these rollovers a permanent option, allowing families to move unused 529 funds into an ABLE account without incurring taxes or penalties, ensuring that the money can be redirected to disability-related costs. This change prevents wasted resources and allows families to adjust when educational goals shift or when unexpected disabilities occur later in life.
- Access to the Saver’s Credit: One of the most innovative features of the OBBBA is that contributions to ABLE accounts now qualify for the federal Saver’s Credit, which was previously available only for retirement account contributions. The Saver’s Credit reduces federal tax liability for lower- and middle-income earners who set aside money for the future. Beginning in 2027, the maximum eligible contribution will rise to $2,100, with the credit itself increasing to $1,050. For families in New Hampshire, this means that contributing to an ABLE account not only builds long-term savings but may also reduce annual tax bills.
Why These Updates Are Important for New Hampshire Families
The OBBBA’s revisions extend beyond tax law adjustments, representing a broader shift in how society supports people with disabilities by increasing support for ABLE accounts. In rural areas that have limited specialized services, for example, the ability to use ABLE funds for transportation, health care, and assistive technology is especially valuable. In addition, parents of children with disabilities gain long-term peace of mind, knowing that programs such as ABLE-to-Work and 529 rollovers are now permanent while adults who develop disabilities after age 26, previously excluded, will soon be able to participate in the program and secure additional resources for daily living. These improvements provide flexibility and empower families to make financial choices tailored to their unique circumstances.
Practical Considerations in Coordinating ABLE Accounts
Although the OBBBA expands the usefulness of ABLE accounts, it is important to remember their limitations. Contribution amounts remain capped each year, and balances above certain thresholds can affect SSI eligibility. For this reason, many families continue to use special needs trusts alongside ABLE accounts because a trust can hold larger sums of money, such as an inheritance or personal injury settlement, without affecting benefits. ABLE accounts, by contrast, work best for regular contributions and everyday expenses.
Moreover, while the governing rules come from federal law, ABLE programs are administered at the state level, meaning that New Hampshire manages its own program, including enrollment procedures, investment options, and account fees. As such, families should carefully review the specific terms of the New Hampshire ABLE program before opening an account and be sure to consult with an experienced special needs planning attorney to ensure that you make the most effective use of these tools.
The One Big Beautiful Bill Act ensures that ABLE accounts are more accessible, more flexible, and more rewarding than ever before, which is great news for families with a member who has special needs. By understanding the OBBBA changes and integrating them into your estate planning strategy, you can safeguard essential public benefits while also creating opportunities for financial independence.
Do You Have Additional Questions about How the OBBBA Impacts Your New Hampshire ABLE Account?
For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about how the OBBBA impacts your New Hampshire ABLE account, contact our estate planning attorneys in our North Andover, Woburn, and Beverly offices at (978) 969-0331. Our Salem and Nashua, New Hampshire office can be reached at (603) 894-4141.
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