One, Big, Beautiful Bill Act

With the passage of the One Big Beautiful Bill (HR1) in 2025, the ABLE annual contribution limit calculation has been modified. Most importantly, the ABLE annual contribution limit is no longer tied directly to the annual gift tax exclusion. 

What are the limits for 2026? 

• The ABLE annual contribution limit is $20,000; and 

• The annual gift tax exclusion is $19,000. 

Why is there a difference between the 2026 ABLE contribution limit and gift tax exclusion? 

• When Congress used the reconciliation process to pass HR1, each provision in the bill was required to have a revenue impact on the federal budget. That impact could be a positive or negative.

• Because of this requirement, the bill links the ABLE annual contribution limit to the annual gift tax exclusion amount and increases the limit for ABLE account contributions by shifting the inflation adjustment base year from 1997 to 1996. 

• This effectively created a new inflation adjusted variable using the 'gift tax exclusion' as the basis but adding one additional year of inflation.

 How were the 2026 numbers calculated?

• This slight increase in inflation was enough to bump the new ABLE annual contribution to $20,000 for 2026, while the gift tax exclusion stayed at $19,000 for 2026.

• The IRS published the new ABLE factor with its annual list of updates to inflation adjusted variables that are part of the tax code. 

What happens when one individual contributes $20,000 to an ABLE account if the gift tax exclusion is $19,000? 

• You should consult tax professionals when determining tax form submissions and possible tax payment. 

• Contributing above the gifting tax exclusion would require submission of IRS Form 709: United States Gift Tax Return to report contributions above $19,000. 

• Married couples who want to contribute the full $20,000 can take advantage of the concept of gift splitting to avoid using any of their lifetime gifting exemption. Talk to a tax professional or review:  https://www.irs.gov/instructions/i709#en_US_2025_publink16784xd0e1517

• Work with tax professionals to determine if a tax payment would be required per lifetime gifting limits. The passage of the One Big Beautiful Bill in 2025 increased the lifetime gifting exemption to $15 million per person. 

Federal Resources 

• IRS Revenue Procedure 2025-32, Page 24, Aggregate Limitations on Contributions to ABLE Accounts

• URL: https://www.irs.gov/pub/irs-drop/rp-25-32.pdf

• IRS FAQs on Gift Taxes 

• URL: https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-gift-taxes

• U.S. Senate Finance - Summary of Provisions of the One Big Beautiful Bill (PL119-21)

• URL: https://www.finance.senate.gov/imo/media/doc/finance_committee_section-by-section_title_vii5.pdf

For more information, please visit our website to access the offering/plan disclosure statements for ABLE programs via:
abletoday.org/analyze-able-programs