AR HB1684

Earnings portion of nonqualified distributions from ABLE accounts are subject to Arkansas income tax, taxable to the party, account owner, or designated beneficiary who makes the withdrawal.

Contributions to ABLE disability savings accounts may be deducted from adjusted gross income, limited to $5,000 per taxpayer per tax year, with excess amounts carried forward up to 4 consecutive tax years.

Deducted contributions are subject to recapture if the taxpayer takes a nonqualified distribution or rolls the account over to another state's tax-deferred savings program, requiring the previously deducted amount to be added back to adjusted gross income.

State employees may request payroll deductions to contribute to ABLE savings accounts or tuition savings programs, with agencies required to adopt formal policies and guidelines for such contributions.

Amendments are effective for tax years beginning on or after January 1, 2021.