How Much Pretax Money Can I Put Into an HSA?

If you are considering opening a Health Savings Account (HSA) or already have one, you might be wondering how much pretax money you can contribute to it. An HSA is a tax-advantaged account that allows you to save money for eligible medical expenses on a pre-tax basis.

The maximum amount of pretax money you can put into an HSA in 2021 is:

• $3,600 for individuals
• $7,200 for families
• If you are 55 or older, you can make an additional catch-up contribution of $1,000 per year

It is important to note that these contribution limits are set by the IRS and are subject to change each year. Contributions made to an HSA are tax-deductible, meaning you can reduce your taxable income by the amount you contribute.

Here are some key points to keep in mind about contributing pretax money to an HSA:

• Contributions can be made by you, your employer, or both
• Any contributions made by your employer are excluded from your gross income
• If you contribute more than the annual limit, you may be subject to taxes and penalties
• Unused HSA funds roll over from year to year, so you can continue to save for future medical expenses

If you are considering opening a Health Savings Account (HSA) or already have one, it's essential to understand how much pretax money you can contribute to maximize your savings potential. An HSA not only provides a means to save for qualified medical expenses but also allows you to do so in a manner that benefits your tax situation.

For the year 2023, the maximum pretax contributions to an HSA are:

• $3,850 for individuals
• $7,750 for families
• Individuals aged 55 or older can contribute an extra $1,000 annually as a catch-up contribution.

Keep in mind that these limits are updated by the IRS periodically to account for inflation, so always verify the numbers each year. When you contribute to an HSA, you can deduct the amount from your taxable income, leading to potential tax savings that can make a difference come tax season.

Moreover, it’s worthwhile to note:

• Both you and your employer can make contributions, giving you more flexibility in funding your HSA.
• Employer contributions don’t count toward your gross income, allowing you to reap those tax benefits fully.
• Exceeding the annual limit could result in tax penalties, so keep track of your contributions for compliance.
• One of the standout features of an HSA is that any unused funds will roll over to the following year, providing a safety net for any unexpected medical expenses down the line.