Treasurer, State

Plain English Breakdown

Checked against official source text during the last sync.

Changes to Tennessee's ABLE Program

This bill removes restrictions on spending from ABLE accounts and updates definitions for 'eligible individual' and 'disability certification' to align with federal standards.

What This Bill Does

• Removes the rule that money in an ABLE account can only be used for education expenses.
• Updates the definition of 'eligible individual' to match federal rules, allowing more people to qualify for the program.
• Changes how a disability certification is defined and who can provide it, aligning with federal standards.

Who It Names or Affects

• People with disabilities or blindness who are under 26 years old when their condition started
• Parents or guardians of individuals who need to file for disability certification

Terms To Know

ABLE account

A special savings account that helps people with disabilities save money tax-free.

Disability certification

A document signed by a doctor saying someone has a disability or blindness and meets certain requirements.

Limits and Unknowns

• The bill does not specify how the changes will be funded.
• It is unclear what specific new expenses can now be covered under ABLE accounts after removing education expense restrictions.

Official Summary Text

Present law establishes the qualified achieving a better life experience (ABLE) program to assist eligib
le individuals in saving money to meet qualified disability expenses. Any earnings made in the ABLE account must only be expended for the student's education expenses. This bill removes such limitation on expenditures.

ELIGIBLE INDIVIDUAL

Present law
requires the qualified ABLE program to allow one or more persons to make contributions for a taxable year into an account for the benefit of an eligible individual who is also the designated beneficiary during the taxable year. The designated beneficiary

must be an eligible individual at the time the account is established, at the time of any contribution to the account, and at the time of a distribution from an account for qualified disability expenses. The program must limit one eligible individual or
d
esignated beneficiary to one account.

Present law defines an "eligible individual" as an individual who is entitled to benefits based on blindness or disability under the federal Social Security Act, and such blindness or disability occurred before the
individual turned 26, or a disability certification for the individual was filed with the federal department of the treasury. Such disability certification, signed by a physician, certifies and includes a copy of an individual's medically determinable ph
y
sical or mental impairment that results in marked and severe functional limitations and that can be expected to result in death or that has lasted or can be expected to last for a continuous period of not less than 12 months, or is blind and such blindnes
s
or disability occurred before the individual turned 26. The eligible individual is the account owner and the designated beneficiary on the account.

This bill changes the definition of "eligible individual" to align with the definition as it is in the f
ederal Internal Revenue Code (IRC), and all rules, regulations, notices, and interpretations released by the U.S. treasury. The IRC's present definition provides that an individual is an eligible individual for a taxable year if, during such taxable year,
(i) the individual is entitled to benefits based on blindness or disability under the federal Social Security Act, and such blindness or disability occurred before the date on which the individual turned 26, or (ii) a disability certification with respec
t
to such individual is filed with the federal secretary of the treasury for such taxable year.

DISABILITY CERTIFICATION

This bill changes the definition of "disability certification" to align with the definition as it is in the IRC, and all rules, regul
ations, notices, and interpretations released by the U.S. treasury. In the IRC, the definition for "disability certification" is, with respect to an individual, a certification to the satisfaction of the federal secretary of the treasury by the individua
l
or the parent or guardian of the individual. The certification certifies that the individual has a medically determinable physical or mental impairment, which results in marked and severe functional limitations, and which can be expected to result in de
a
th or which has lasted or can be expected to last for a continuous period of not less than 12 months, or is blind within the meaning of the federal Social Security Act, and such blindness or disability occurred before the date on which the individual turn
e
d 26. The certification includes a copy of the individual's diagnosis relating to the individual
'
s relevant impairment or impairments and is signed by a physician meeting the criteria of the federal Social Security Act.

Current Bill Text

HOUSE BILL 496
By Reedy

SENATE BILL 452
By Massey

SB0452
000792
- 1 -

AN ACT to amend Tennessee Code Annotated, Section
71-4-803 and Section 71-4-806, relative to the
Achieving a Better Life Experience Act.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Section 71-4-803, is amended by deleting
subdivisions (5) and (6) and substituting:
(5) "Disability certification" has the same meaning as provided in the code;
(6) "Eligible individual" has the same meaning as provided in the code. The
eligible individual is the account owner and the designated beneficiary on the account;
SECTION 2. Tennessee Code Annotated, Section 71-4-806(d), is amended by deleting
the subsection and substituting:
(d) Contributions from a student's individualized education account to an
achieving a better life experience account for the benefit of the student may only be
expended for the student's education expenses in accordance with this part, the rules
promulgated pursuant to this part, and the code.
SECTION 3. For purposes of promulgating rules, Section 1 of this act takes effect upon
becoming a law, the public welfare requiring it. For all other purposes, Section 1 of this act
takes effect on January 1, 2026, the public welfare requiring it. All remaining sections of this act
take effect upon becoming a law, the public welfare requiring it.