If you contribute to a Maryland ABLE account, you can claim a Maryland ABLE account tax deduction of up to $2,500 per contributor, per beneficiary, each tax year. Married couples filing jointly each get their own $2,500, so a couple contributing to the same account can subtract up to $5,000 combined. Anything you contribute above the annual cap carries forward for up to ten years, so a large one-time deposit still delivers its full state tax benefit over time. The deduction is a Maryland subtraction modification, not a federal deduction, and it only applies to the Maryland ABLE program.
How Much You Can Deduct
The deduction is set by Maryland Code, Tax-General § 10-208(v), which caps the subtraction at $2,500 per contributor per beneficiary for the tax year.1Maryland General Assembly. Maryland Code Tax-General 10-208 – Subtraction Modifications A few practical points follow from how the cap is written:
- On a joint return, each spouse is treated as a separate contributor. A couple can subtract up to $5,000 combined if both actually contributed.2ABLE National Resource Center. Maryland
- If you contribute to ABLE accounts for more than one beneficiary, you get a separate $2,500 subtraction for each account.
- If several family members each put money into one beneficiary’s account, each contributor claims their own $2,500 on their own Maryland return.
The federal annual contribution limit for ABLE accounts is much higher: $19,000 for 2026, tied to the gift tax exclusion.3Internal Revenue Service. What’s New – Estate and Gift Tax Maryland’s deduction tops out well below that, so depositing the federal maximum in a single year will exceed what you can subtract on your state return in that same year.
The Ten-Year Carryforward
When your contribution for the year is more than $2,500, the excess carries forward for up to the next ten tax years.1Maryland General Assembly. Maryland Code Tax-General 10-208 – Subtraction Modifications A parent who deposits $19,000 in one year subtracts $2,500 that year and carries the remaining $16,500 forward, using up to $2,500 of it on each subsequent return until it’s gone or the ten years run out.
Maryland doesn’t track your unused carryforward for you. Keep a running total yourself, year to year, so you know how much is still available and when each year’s leftover was created.
Maryland Contributions Only
The subtraction applies only to contributions made to the Maryland ABLE program. Deposits into another state’s ABLE plan do not qualify for the Maryland deduction, even if you’re a Maryland resident paying Maryland tax. If you want the deduction, the money has to go into a Maryland account.
Rollovers from a 529 college savings plan into a Maryland ABLE account are allowed and count toward the $19,000 annual contribution limit. For an indirect rollover where you take possession of the funds before redepositing, you have 60 days to complete the transfer.
How to Claim It on Your Maryland Return
Report the ABLE subtraction on Maryland Form 502SU (Subtractions From Income), which attaches to your Form 502. Enter the amount on the line for code xd.4Maryland Comptroller of the Treasury. Maryland Form 502SU – 2025 Subtractions From Income Some older guidance points to other codes; xd is the right one for Maryland ABLE contributions.
The total from Form 502SU flows into Form 502 and reduces your Maryland adjusted gross income before the state tax rate is applied. If you’re drawing down a carryforward from a prior year, combine it with any current-year contribution on the same line, but don’t enter more than $2,500 for the year.
Documentation to Keep
Hold on to Maryland ABLE account statements that show the date and amount of every contribution during the tax year. The program’s online portal breaks out who contributed what, which matters because you can only deduct the amounts you personally put in, not deposits made by other people into the same account.
If you also took distributions, the IRS will issue a Form 1099-QA showing the gross distribution, the earnings portion, and the basis, and Form 5498-QA reports your total contributions and the account’s fair market value.5Internal Revenue Service. Instructions for Forms 1099-QA and 5498-QA Keep both forms with your Maryland records for at least three years after filing, which matches the Comptroller’s general audit window.6Maryland Comptroller of Maryland. General Audit / Statute of Limitations
Who Qualifies for a Maryland ABLE Account
You can only deduct contributions to an account the beneficiary is eligible to hold. Starting January 1, 2026, a person qualifies for an ABLE account if they have a significant disability that began before age 46. The previous threshold was age 26, so the ABLE Age Adjustment Act substantially expands who can be a beneficiary.
The disability has to meet Social Security Administration criteria: marked functional limitations that have lasted or are expected to last at least 12 months. The beneficiary does not have to be receiving Social Security disability benefits, and employment and income don’t affect eligibility. Without an existing SSA benefits record, you’ll need a physician’s signed statement confirming the disability began before age 46.
Federal Treatment, Briefly
There is no federal income tax deduction for ABLE contributions. The federal benefits sit on the other side of the account: investment earnings grow tax-free, and withdrawals for qualified disability expenses are excluded from gross income under 26 U.S.C. § 529A.7Office of the Law Revision Counsel. 26 USC 529A – Qualified ABLE Programs If you take money out for something that isn’t a qualified disability expense, the earnings portion is taxed as ordinary income and hit with a 10% penalty. That tax treatment is separate from the Maryland subtraction; the state deduction is earned at the contribution stage, not the withdrawal stage.