Qualified ABLE Program

The law updates California treatment of disability-savings accounts beginning in 2026, including federal eligibility and contribution-rule changes. It also gives qualifying vehicle dealers a path to resume filing vehicle sales taxes through the California Department of Tax and Fee Administration rather than the Department of Motor Vehicles.

What the law does ​

• Conforms California personal and corporate income-tax rules for qualified ABLE programs to specified federal changes, effective for tax years beginning January 1, 2026.
• Updates ABLE-account contribution requirements to reflect those federal changes.
• Requires the Treasurer’s office to report by January 1, 2030, on ABLE accounts opened by people newly eligible under the raised age limit.
• Allows the California Department of Tax and Fee Administration to reinstate an exemption from DMV vehicle-tax payment procedures for dealers selling at least 1,000 vehicles annually and in good standing.
• Makes a reinstated dealer exemption effective at the start of a calendar quarter at least 30 days after notice.

Who it affects ​

• People with disabilities and families using or seeking qualified ABLE accounts.
• Employers and other entities subject to California corporate income tax that use qualified ABLE-program rules.
• Licensed vehicle dealers whose exemption from DMV tax-payment procedures was revoked.

Context ​

ABLE accounts are savings accounts for qualified disability expenses, with specified tax treatment.

Breakdown ​

Dealer Tax Exemption Reinstatement ​

The bill lets the California Department of Tax and Fee Administration reinstate a licensed vehicle dealer’s exemption from paying certain vehicle sales or use taxes through the Department of Motor Vehicles. The exemption may be reinstated when the specified requirements are met, and the department must notify the dealer when it is restored. The bill also makes technical, non-substantive updates to these rules.

Key takeaways

• The bill allows the California Department of Tax and Fee Administration to restore an exemption that lets eligible licensed vehicle dealers pay applicable taxes without using the Department of Motor Vehicles process.
• The reinstatement authority applies when the dealer meets the specified requirements for the exemption.
• The department must notify a licensed dealer when its exemption has been reinstated.
• The bill does not change the underlying tax requirement for covered vehicle sales.
• The bill also makes technical changes that do not alter the substance of the exemption rules.

ABLE Account Tax Updates ​

This bill updates California tax rules for ABLE accounts to match federal changes made by the One Big Beautiful Bill Act. Starting with tax years beginning on or after January 1, 2026, California will follow those federal changes involving qualified ABLE programs. It also updates California’s rules for who may make contributions to an ABLE account and under what requirements.

Key takeaways

• California will conform its tax treatment of qualified ABLE programs to relevant federal changes made by the One Big Beautiful Bill Act.
• The state tax changes apply to taxable years beginning on or after January 1, 2026.
• The bill updates rules governing the requirements for contributions to ABLE accounts.
• ABLE accounts are intended to help people with disabilities save for qualified disability expenses.