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HSA Tax Savings

How HSAs help you save on federal taxes

 

Pre-tax payroll deductions

If your employer lets you contribute to your HSA by pre-tax payroll deduction, your contributions will not be taxed prior to being deposited into your HSA.


Post-tax contributions

You can reduce your taxable income by contributing post-tax dollars to your HSA and claiming a deduction when you file your taxes. (Consult an accountant or the IRS to verify eligibility.)

Tax-free medical expenses

You’re saving money every time you pay for IRS-qualified medical expenses with tax-free dollars from your HSA.

Tax-free interest

The interest on your HSA funds grows on a tax-deferred basis. Plus, any interest earned is not considered taxable income when it’s used to pay for IRS-qualified medical expenses

Retirement

After you retire, you can continue to use tax-free HSA funds to pay for IRS-qualified medical expenses. Funds can also be withdrawn for other reasons at retirement age without penalty, but withdrawals will be taxed.

Exceptions

The only time you may pay taxes or penalties on your HSA is if you use funds to pay for non-IRS-qualified medical expenses, OR if you contribute more than the yearly maximum contribution limit. However, you have until your tax-filing deadline to correct these situations without tax penalty. HSA Bank will send you all the documents you need to complete your HSA-related tax filing.

 

 

 

 

 

 

 

Additional savings on state taxes

Each state has its own tax guidelines for HSAs. To see if your HSA is eligible for state tax savings, select your state from the list below.

Arizona

Arkansas

Colorado

Connecticut

Delaware

Georgia

Hawaii

Idaho

Illinois

Iowa

Indiana

Kansas

Kentucky

Louisiana

Maine

Maryland

Massachusetts

Missouri

Michigan

Minnesota

Mississippi

Montana

Nebraska

Nevada

New Mexico

New York

North Carolina

North Dakota

Ohio

Oklahoma

Oregon

Pennsylvania

Rhode Island

South Carolina

Utah

Vermont

Virginia

West Virginia

Wisconsin

The following states are not subject to state income tax:

Alaska

Florida

New Hampshire

South Dakota

Tennessee

Texas

Washington

Wyoming

The following states do not provide tax benefits for HSAs at the state level:

Alabama

California

New Jersey