Details of Public Law 119-21, section 70115 , One Big Beautiful Bill Act

The IRC provides for a tax-favored savings program intended to benefit disabled individuals, known as qualified ABLE programs. The provision makes permanent the increased contribution limitation to ABLE accounts under certain circumstances, which was set to expire under the Tax Cuts and Jobs Act (Public Law (P.L.) 115-97, section 11024(a)), for contributions made before January 1, 2026.

While the general overall limitation on contributions (the per-donee annual gift tax exclusion ($19,000 for 2025)) remains the same, the limitation is increased with respect to contributions made by the designated beneficiary of the ABLE account. Under the provision, after the overall limitation on contributions is reached, an ABLE account’s designated beneficiary may contribute an additional amount, up to the lesser of (a) the Federal poverty line for a one-person household; or (b) the individual’s compensation for the taxable year.

The provision also modified the cash contribution annual inflation calculation to require the cost-of-living base year calculation to begin one year earlier, replacing the 1997 starting year with 1996.

California conforms, under the PITL, relating to qualified ABLE programs and accounts under IRC section 529A, as of the specified date of January 1, 2025, with modifications.

In 2019, Assembly Bill 91 was chaptered to conform to section 11024, of P.L. 115-97, relating to the temporary ABLE account contribution limitation increase, which applies to contributions made before January 1, 2026.

California does not conform to the new federal law that makes the change to ABLE accounts permanent or the inflation adjustment calculation.

The estimated revenue impact to conform to the above federal provisions would result in the following loss:

26/27 27/28 28/29 29/30 ($40,000) ($20,000) ($30,000) ($40,000)