In this fourth installment of our breakdown of the new tax reform legislation, we’re spotlighting a set of provisions that may not grab headlines—but could make a significant difference for taxpayers in specific situations.
This section of the bill includes targeted tax updates for:
Gamblers
Families contributing to ABLE accounts
Students with discharged loans
Members of the military and intelligence community
Wagering Losses Will Be Limited
Under prior law, taxpayers could deduct gambling losses up to the amount of gambling winnings. That general rule remains—but now, only 90% of gambling losses will be deductible going forward.
What this means: If you report gambling winnings, you’ll still be able to deduct losses—but only up to 90%, not the full amount. This change applies starting in 2026.
ABLE Accounts Get Expanded Support
ABLE accounts are savings accounts for individuals with disabilities. Several enhancements are being made:
Higher contribution limits (adjusted based on inflation, now indexed from 1996 instead of 1997)
Permanent extension of the increased contribution limit beyond 2025
Savers Credit eligibility: Contributions to ABLE accounts will continue to qualify for the Savers Credit, and the maximum credit increases from $2,000 to $2,100
What this means: ABLE accounts remain a powerful and now more accessible tool for families with disabilities. These updates encourage both saving and financial independence for eligible individuals.
529-to-ABLE Account Rollovers Made Permanent
Families will now be able to permanently roll over funds from 529 college savings plans into ABLE accounts, allowing for more flexible long-term planning if a beneficiary’s needs change.
What this means: If a child with a 529 plan later becomes eligible for an ABLE account, families won’t lose those savings—they can be repurposed tax-free.
Expanded Military Tax Relief for Hazardous Duty Areas
Tax benefits previously available to service members in the Sinai Peninsula are now:
Made permanent, and
Expanded to cover active-duty military personnel serving in Kenya, Mali, Burkina Faso, and Chad
What this means: More service members will benefit from exclusions for combat-zone pay and other tax advantages tied to dangerous overseas assignments.
Student Loans Discharged Due to Death or Disability Will Stay Tax-Free
Loan discharges for death or total and permanent disability will continue to be excluded from income, and this exclusion is extended permanently. This applies to both:
Federal loans
Private education loans
Note: A valid Social Security number must be reported on the tax return to claim the exclusion.
What this means: Families or individuals dealing with the aftermath of severe disability or loss will not face a surprise tax bill on forgiven student loans.
While these provisions may seem narrow, they offer meaningful financial relief to taxpayers in uniquely vulnerable or high-stress situations—gamblers who report income, families supporting a disabled loved one, students facing medical hardship, and military members serving in dangerous conditions.
Each of these changes begins in 2026, and several are made permanent. If any of these apply to you or your family, now is the time to revisit your financial and tax planning strategies.