Senate Proposal Would Make Certain ABLE Tax Provisions Permanent

Senator Ted Cruz (R-TX) and co-sponsor Senator Mike Braun (R-IN) have introduced S. 1226, a bill to make permanent several individual tax provisions. Included in the proposal are the following changes implemented by the Tax Cuts and Jobs Act of 2017 that are set to expire after 2025 – but would be made permanent under the proposal.

  • In addition to the annual contribution limit based on the tax year gift tax exclusion amount, a designated beneficiary who is working is permitted to contribute compensation up to the poverty line amount for a one-person household (so long as their employer did not make contributions to certain retirement plans)
  • Allows an ABLE account’s designated beneficiary to claim the saver's credit for contributions to the account.
  • Allows rollovers in limited amounts from a 529 qualified tuition program account of the designated beneficiary to the ABLE account of the designated beneficiary or his or her family member.

The bill has been referred to the Senate Committee on Finance.