ABLE Accounts Update Related to Income Tax

This bill updates existing Louisiana law about ABLE accounts. 

• ABLE account: A savings account for disabled people who receive support from the state. Usually, if someone getting disability benefits saves too much money, they lose those benefits. But with an ABLE account, they can save up safely and still get support from the state. 

  • ABLE stands for “Achieving a Better Life Experience.”

Everyone has to pay part of the money that they make back to the government. This is called “income tax.” Right now, only some people with ABLE accounts don’t have the money in their ABLE accounts count towards the income tax they have to pay.

If this bill passes:

• People with ABLE accounts who are not married will not have to pay income tax on up to $2400 per year, starting in 2026.

• People with ABLE accounts who are married will not have to pay income tax on up to $4800 per year, starting in 2026.

• If people put less than $2400 or $4800 in their accounts in a year, the amount between what they put in and the amount they are allowed to without being taxed, adds to the amount not taxed next year.

  • For example, if I am an unmarried person with an ABLE account in Louisiana, and I only put $1400 in my account in a year, that’s $1000 less than 2400.

  • So next year, that $1000 will be added to the $2400 that I don’t have to pay taxes on. This means that in that next year, I could put up to $3400 into my ABLE account before having to pay tax on it.

• Money from an ABLE account used for things that are not “qualified expenses” will be taxed.

  • Qualified expenses: Because ABLE accounts are only for disabled people also receiving support from the state, people can only use money saved in ABLE accounts for certain things. These things that are allowed are called “qualified expenses.” In Louisiana, they include:

    • Education

    • Housing

    • Transportation, like taking the bus or train

    • Job training

    • Healthcare