Navigating 2026 Tax Changes: Strategic Opportunities for Families With Loved Ones Who Have Special Needs

Beginning in 2026, sweeping tax law changes will reshape the landscape for successful families, particularly those supporting loved ones with special needs. While the headlines focus on tax brackets and estate thresholds, the One Big Beautiful Bill Act includes significant, but often overlooked, provisions that impact long-term financial planning, charitable giving, and support structures for individuals with disabilities. This article outlines the key changes and how families can act now to adapt and benefit.

Key Changes Impacting Special Needs Financial Planning

ABLE and 529 Account Enhancements

Families supporting individuals with disabilities are increasingly using ABLE accounts—tax-advantaged savings tools for qualified expenses—as part of their long-term planning. These accounts help protect assets without affecting eligibility for means-tested benefits like Medicaid or Social Security income. Starting in 2026, two key improvements will take effect:

• Higher contribution caps (ABLE to Work made permanent)
  The temporary “ABLE to Work” provision—previously allowing working beneficiaries to contribute extra funds to their ABLE accounts—has now been made permanent. This provision lets eligible individuals contribute an amount equal to their earnings or the federal poverty level (whichever is less), in addition to the standard annual contribution limit, which currently aligns with the $19,000 gift tax exclusion for 2025. Making this rule permanent increases the savings potential and financial independence of working individuals with disabilities.
• 529 to ABLE rollovers made permanent
  Starting January 1, 2026, families can permanently roll over funds from 529 education savings plans into ABLE accounts. This option provides much-needed flexibility for families whose original college savings plans are no longer appropriate, particularly if a child’s educational path has changed due to a disability. Instead of facing penalties or limited options, parents and guardians now have a seamless way to reallocate resources for future expenses.
• 529 accounts now offer expanded flexibility beyond traditional college expenses. Funds can be used for skilled trade training, vocational certifications, certain testing services, online education platforms, and educational therapies for students with disabilities. Additionally, the annual limit for K–12 private or specialized education expenses has doubled from $10,000 to $20,000.

Estate & Gift Tax Planning: A New Landscape

For some families, the upcoming changes to estate and gift tax thresholds are among the most consequential updates in recent history.

Unified Gift and Estate Tax Exemption Increase

Beginning in 2026, the lifetime unified gift and estate tax exemption will increase to $15 million per person, with inflation-based adjustments starting in 2027. This expanded threshold allows families to transfer wealth across generations, tax-efficiently and with strategic intent. For families with dependents who have special needs, this increase opens greater opportunities to fund Special Needs Trusts (SNTs), contribute to family foundations, or structure multi-generational support plans, while helping to decrease tax exposure.

Strategic Planning Considerations

Philanthropy With Purpose

In tandem with estate and gift changes, charitable giving rules are also evolving. Starting in 2026, families in higher tax brackets may lose the ability to increase deductions for charitable contributions. This creates a planning window in 2025: Individuals considering large philanthropic gifts, whether to private foundations, donor-advised funds, or causes connected to disability advocacy, may benefit from acting before year-end.

• New floor for itemizers: Deductions for charitable contributions are only allowed once they exceed 0.5% of the taxpayer’s adjusted gross income (AGI).
• Reduced deduction for top earners: The maximum tax benefit for charitable contributions is capped at 35% for individuals in the top tax bracket (previously 37%).

Charitable giving strategies in 2025 can also complement ABLE and estate planning moves, creating a coordinated approach that aligns family values with financial optimization.

What Should Families Do Next?

With the new tax law taking effect soon, families should meet with the Sequoia Financial Group team and take a phased approach to adapt and prepare:

Immediate Actions

• Plan charitable gifts
  Meet with your advisor to identify potential philanthropic gifts for 2025. Structuring these ahead of the 2026 rule changes can help preserve their full tax benefits.
• Increase 2025 contributions
  Consider increasing ABLE account contributions this year, especially if the individual is working and qualifies for the higher cap.

Short-Term (Next 6 Months)

• Review ABLE and 529 strategies
  Evaluate whether a 529-to-ABLE rollover is right for your family, especially if educational needs have shifted.

Long-Term

• Develop multi-generational plans
  Use the higher estate exemption to build lasting support structures, including Special Needs Trusts, health care directives, and inheritance plans that adapt with time.
• Establish governance for care
  Create a care committee or draft a letter of intent to document wishes, responsibilities, and guidelines for your loved one’s future. These governance tools provide continuity even when circumstances change.

Final Thoughts

While the upcoming tax changes introduce complexity, they also offer a renewed opportunity for successful families to reassess and refine their legacy plans. For those supporting individuals with special needs, these shifts can help create more secure, adaptable, and intentional financial futures. The key is to begin with strategic guidance, clear priorities, and a vision for long-term care.

If you haven’t already, consult with the Sequoia Financial Group team to ensure your plan reflects your values and the new realities of the tax landscape.