The Virginia General Assembly recently enacted budget language (Item 3-5.11 of the 2016 Appropriations Act (House Bill 30, Chapter 780) that establishes an individual income tax deduction for contributions to Achieving a Better Life Experience (“ABLE”) accounts, effective for taxable years beginning on or after January 1, 2016. ABLE accounts are tax-advantaged savings accounts that are intended to facilitate the saving of private funds for paying the qualified disability expenses of certain disabled individuals. 

The amount deducted on any individual income tax return in any taxable year is generally limited to $2,000 per ABLE account. Contributors may carry forward any un-deducted amounts until their contributions have been fully deducted. If the contributor has attained age 70, he may deduct the entire amount contributed to an ABLE account, less any amounts previously deducted.

The budget language requires the Department of Taxation to adopt guidelines to implement the provisions of such deduction, including the computation, carryover, and recapture of the deduction. The Department is currently in the process of developing such guidelines.

Legislative Documents

Item 3-5.11 of the 2016 Appropriations Act (House Bill 30, Chapter 780)

Guideline Development Documents

ABLE Act Contributions Deduction Workplan (PDF)

Draft ABLE Act Contributions Deduction Guidelines (PDF)