How Much Will I Get Off on My Taxes With HSA Contributions?

When you contribute to a Health Savings Account (HSA), you may be eligible for tax benefits that can help reduce your taxable income and save you money. HSA contributions are tax-deductible, meaning the money you put into your HSA is exempt from federal income tax, state income tax (in most states), and FICA taxes.

The amount you can deduct on your taxes with HSA contributions depends on your tax filing status, income, and the maximum contribution limits set by the IRS each year. For the tax year 2021, the contribution limits are $3,600 for individuals and $7,200 for families.

Here's how HSA contributions can benefit you come tax time:

• Reduces your taxable income: The money you contribute to your HSA is deducted from your gross income, lowering the amount of income subject to taxation.
• Lowers your tax liability: By reducing your taxable income, you may move to a lower tax bracket, ultimately resulting in paying less in taxes.
• Maximizes savings: HSA contributions grow tax-free, and withdrawals for qualified medical expenses are tax-free, allowing you to save more in the long run.

It's important to keep in mind that HSA contributions must be made before the tax filing deadline for the year you are claiming the deduction. Additionally, you cannot contribute more than the annual contribution limit set by the IRS, or you may be subject to penalties.

When you contribute to a Health Savings Account (HSA), you unlock a world of tax benefits that not only lower your taxable income but also create long-term savings opportunities for your medical expenses. HSA contributions aren’t just for the present; they’re an investment in your financial health.