HSA Contribution Limits

Health savings accounts allow you to legally avoid federal income tax by saving up to $3,550 for singles or $7100 for families, into your HSA health plans account for 2020.*

Contributions are Tax Deductible

hsa-tax-deductionsHSAs don’t have a minimum deposit requirement. Whatever you deposit into your account by April 15 of every year (July 15th for 2020) is an above-the-line tax deduction for the previous year’s income taxes. 

Even if you take the standard deduction and don’t itemize deductions, you’ll get a federal income tax deduction on anything you contribute. This tax deduction has no limitations on the amount or source of income, and it is available to everyone.

Pro-rated Deductibility if You Cancel Your Insurance

cancel-insuranceIf you cancel your HSA-qualified health insurance before you’ve had the coverage for a year, your maximum contribution amount is pro-rated based on the number of months you had your coverage in force. Note, you don’t lose that money just because you no longer have a qualifying health plan. You simply cannot contribute to the HSA any longer.

Rollover Contributions 

rollover contributionsA one-time rollover from your IRA (Individual Retirement Account) or FSA (Flexible Spending Account) is allowed.

Tax Savings

tax-savingsEmployer HSA contributions are excluded from income and are not subject to any income tax or FICA. HSA contributions typically reduce your federal income tax for the year, sometimes even lowering your tax bracket.

Most states also allow a state income tax deduction on HSA health plan contributions. To see if your state offers tax deductions, please see our HSA State Income Tax page.

 

IMPORTANT REMINDER for 2020 Taxes: The deadline for contributions is April 15, 2021. An individual can deposit up to $3,550 into an HSA-qualified account, while a family can deposit up to $7,100. You can deposit as little or as much as you’d like (without going over), and if you don’t use the money, it simply rolls over for the next year.

* Individuals age 55 and over may deposit into their account (and take a tax deduction on) an additional catch-up contribution of $1,000.

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