In 2014, Congress passed the federal Achieving a Better Life Experience Act of 2015 which allows states to create “Achieving a Better Life Experience” (ABLE) accounts, which are tax-free accounts that can be used to save for disability-related expenses. In 2015, the Wisconsin legislature authorized Wisconsin to create its own ABLE account program, and it authorized a Wisconsin income tax deduction for contributions to Wisconsin ABLE accounts.
On March 31, 2016, the 2015 law authorizing Wisconsin to create its own ABLE account program was repealed. Although Wisconsin will not have its own ABLE account program, Wisconsin residents can benefit from ABLE accounts created in other states. On March 31, 2016, the governor signed a new law, 2015 Wisconsin Act 312, which gives preferential tax treatment to ABLE accounts created in other states. Under 2015 Wisconsin Act 312, the tax benefits available to Wisconsin residents for ABLE accounts created in other states include the following: (1) funds withdrawn from an ABLE account created in another state to pay the qualified expenses of a Wisconsin resident are not subject to Wisconsin income tax, and (2) subject to certain limitations, a Wisconsin income tax deduction is allowed for contributions that a Wisconsin resident makes to an ABLE account created in another state. The new law is effective for tax years beginning after December 31, 2015.
Click here to learn more about ABLE accounts. Click here to read 2015 Wisconsin Act 312 which repealed the law authorizing Wisconsin to create its own ABLE account program, but enacts new laws that allow Wisconsin residents to enjoy preferential tax treatment for ABLE accounts created in other states.
If you have any questions about how the information in this article may affect you or your business, please contact Carolyn Hegge at chegge@stroudlaw.com or (608) 257‑2281 or your Stroud attorney.
DISCLAIMER: The information in this article is provided for general informational purposes only, is not necessarily updated to account for changes in the law, and should not be considered tax or legal advice. This article is not intended to create, nor does the receipt of it constitute, an attorney-client relationship. You should consult with your own legal and/or financial advisors for legal and tax advice tailored to your specific circumstances.