Louisiana Senate passes tax exemption for ABLE account deposits effective 2026

On April 9, 2025, Louisiana lawmakers introduced Senate Bill 12, a legislative proposal aimed at modifying the existing Achieving a Better Life Experience (ABLE) Account Program. This program is designed to assist individuals and families in saving funds to support persons with disabilities in maintaining their health, independence, and quality of life.

The bill seeks to amend current tax regulations concerning ABLE accounts. Under existing law, deposits made into these accounts are exempt from state taxable income if authorized by the legislature. Senate Bill 12 proposes to repeal this provision and instead establish a new tax exemption for annual deposits made into ABLE accounts. Specifically, it would allow single filers to exempt up to $2,400 and joint filers up to $4,800 from their state income tax per account. Notably, any unused portion of these annual limits would roll over to subsequent years, maintaining the tax-exempt status.

Additionally, the bill introduces a significant change regarding tax deductions for educational expenses. It stipulates that account owners cannot claim both the tax exemption for ABLE accounts and the tax deductions for costs associated with enrollment in elementary or secondary schools within the same taxable year. This provision aims to clarify the tax benefits available to families, though it may limit options for some.

Senate Bill 12 is set to take effect on August 1, 2025, and will apply to taxable periods beginning January 1, 2026. The proposal has sparked discussions among lawmakers and stakeholders, particularly regarding its implications for families with disabled members who rely on these savings accounts for educational and health-related expenses.

As the bill progresses through the legislative process, it is expected to face scrutiny and debate, particularly concerning the balance between tax benefits for families and the potential impact on educational funding. Advocates for individuals with disabilities may express concerns about the limitations imposed by the prohibition on dual claims for tax benefits.

Overall, Senate Bill 12 represents a significant shift in how Louisiana supports families saving for the future of individuals with disabilities, with potential long-term implications for both tax policy and the financial well-being of affected families.