Key takeaways:
Contributing to a health savings account (HSA) allows you to pay for qualified medical expenses with tax-free dollars.
If HSA contributions are taken from your paycheck before taxes, you can’t deduct them on your tax return. But contributions you make with after-tax money may be deductible, even if you take the standard deduction.
You have until the tax-filing deadline (April 15) to make HSA contributions for the prior year, so it’s important to track any contributions made after year end.
Contributing money to your health savings account (HSA) can help you save money on healthcare costs.
The money you contribute to an HSA can be used to pay for qualified medical expenses tax-free. You can also invest the funds in your account; your earnings are tax-free. And depending on how you contribute money to your HSA, you may be eligible to deduct the contributions on your tax return.
How does an HSA work?
An HSA is a special tax-advantaged savings account for individuals who have a qualified high-deductible health plan (HDHP). You can use HSA funds to pay for qualified medical expenses, such as prescription medications and eyeglasses.
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Your employer may offer you an HSA as part of its health benefits. You can allocate money from your paycheck to your HSA (up to the annual contribution limit). Your employer will deduct the money from your paycheck before taxes are taken out. This means you are contributing pretax dollars to your account.
Even if your employer offers an HSA, you can still open your own HSA through a bank or brokerage firm as long as you’re eligible. This is also an option if you are self-employed.
In these cases, you will have to manage the contributions you make to the account. You can send the money to your HSA provider or use an automatic bank transfer program. Since you’re not funding your HSA through a payroll deduction, you’ll need to claim your tax benefit when you submit your tax return.
Are HSA contributions deductible on your tax return?
Yes. HSA contributions may be tax-deductible depending on how the funds are added to the account.
Here’s how contributions typically work for HSAs:
Contributions made through your paycheck are automatically tax-free. When you contribute to an HSA through your employer’s payroll system, the money is taken out before taxes. That means you don’t need to deduct it again on your tax return.
Contributions made on your own may be tax-deductible. If you add money to your HSA outside of payroll, such as through your bank or brokerage, you can usually claim a deduction when you file your tax return.
You’re not allowed to receive tax benefits twice from one contribution. If your HSA contributions were excluded from your paycheck taxes, you can’t deduct them again later on your tax return.
How do HSA contributions work?
The annual contribution limit for HSAs is set by the IRS. This amount increases each year to account for inflation. The contribution limit for your HSA depends on the type of plan you have (individual or family coverage), your age, and how many months you were HSA eligible. For example, the HSA contribution limit for an individual plan in 2026 is $4,400, up from $4,300 in 2025. If you have a family plan, the 2026 contribution limit increases to $8,750, up from $8,550 in 2025.
If you’re age 55 or older, you can contribute an additional $1,000 for the year. For example, if you are 58 and have an individual HSA-eligible plan for the entire year, you can contribute up to $5,400 to your HSA in 2026.
Cafeteria plan
Cafeteria plans, also known as Section 125 plans in the Internal Revenue Code, give participants benefits such as group-term life insurance and HSAs on a pretax basis. This means your contributions to an HSA will reduce your taxable income. For example, if your contribution for the year is $2,000 and your gross income is $70,000, then the amount of your gross income that’s subject to income taxes is $68,000.
With a Section 125 plan, your employer will manage your HSA contributions through a salary reduction arrangement. All you have to do is determine the amount you would like to have deducted from your salary every paycheck. Your employer will automatically deduct that amount from your paychecks before taking out income tax and other taxes.
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Rules for HSA tax deductions
Your HSA provider will send you Form 5498-SA. This form gives you a summary of your HSA contributions. Here’s what you need to know:
This form shows how much you added to your HSA during the year.
If your contributions weren’t taken from your paycheck pretax, you can claim an HSA deduction. Use the amounts on Form 5498-SA (or your own contribution records) to help calculate it.
Report your deduction on Form 8889. Then include that amount on line 13 of Schedule 1, Part II of your Form 1040 when filing your taxes.
HSA providers must file Form 5498-SA with the IRS by May 31 of the year after the contributions were made for each person they maintain an HSA for. Many people receive Form 5498-SA after they’ve already filed their tax return.
You don’t need Form 5498-SA to file your taxes. It’s primarily used to confirm your HSA contribution amounts.
Since HSA contributions can be made up until the tax-filing deadline (usually April 15), you may need to use your own records to report contributions made between January 1 and the deadline.
Generally, you have to itemize your deductions to take advantage of many IRS deductions. But you don’t have to itemize your deductions to claim the HSA tax benefit. You can still use the standard deduction, which is a fixed amount based on your filing status.
HSA tax advantages
An HSA has distinct tax advantages that distinguish it from other accounts. If you qualify to contribute to an HSA, you can take advantage of these tax benefits.
1. Contribute pretax dollars or receive a tax deduction
If you use an employer’s Section 125 plan, your HSA contributions are made with pretax dollars. This reduces your taxable income before taxes are calculated.
But if you set up your own HSA at a financial institution, you can deduct your contributions on your tax return.
2. Pay for medical expenses with tax-free dollars
With some tax-advantaged accounts, such as a 401(k) or an individual retirement account (IRA), you have to wait until you reach a certain age until you can spend the contributions. But this is not the case with an HSA. You can spend the money in your HSA anytime you want to pay for qualified medical expenses, without incurring taxes or penalties. The funds in your account will not expire.
Here are a few examples of HSA-eligible medical expenses:
Crutches
Glasses
Hospital services
Lab fees
Lactation expenses
Pregnancy test kits
Prescription medications
Wheelchairs
X-rays
Some services and items, such as cosmetic surgery and vitamins, don’t count as qualified medical expenses unless they are considered medically necessary. In such cases, you will likely need a letter of medical necessity from your healthcare professional explaining your condition and why the recommended treatment is needed. If you use your HSA to pay for nonqualified expenses, you’ll owe income tax and a 20% penalty on these amounts.
Generally, you cannot use an HSA to pay for healthcare insurance premiums. But there are exceptions, such as premiums for qualified COBRA coverage or long-term-care insurance. But you can use your HSA funds for deductibles, copays and coinsurance.
3. Allow your investment earnings to grow tax-free
The funds you contribute to your HSA never expire. You can use your unspent funds to invest in assets, including:
Stocks
Bonds
Exchange-traded funds
Mutual funds
And you do not have to report your investment earnings on your tax return. The earnings are tax-free unless you use them for nonqualified expenses.
Other HSA benefits
Here are some other HSA benefits you should know:
You can use your HSA for dependents. HSA money can be used to pay for qualified medical expenses for your spouse and qualified dependents.
You can use your HSA funds to pay for past medical bills. As long as the expense was qualified and incurred after your HSA was opened, you can reimburse yourself later.
You can use your HSA during retirement. After age 65, you can withdraw HSA funds penalty-free for nonmedical expenses. But you will still owe income taxes. If you use your HSA funds to pay for qualified medical expenses, it will be tax-free at any age.
Frequently asked questions
One downside of an HSA is that it requires an HDHP, which can mean higher out-of-pocket costs before insurance kicks in. Also, if you don’t use the funds for qualified medical expenses, you’ll face taxes and a penalty on withdrawals before age 65.
If you contribute to your HSA with after-tax dollars, your HSA contributions are considered an above-the-line deduction, also known as an adjustment to income. This means you can deduct your contributions directly from your gross income, regardless of whether you itemize deductions or take the standard deduction. On the other hand, below-the-line deductions, also known as itemized deductions, are deducted after you calculate your adjusted gross income (AGI). Above-the-line deductions are beneficial because they lower your AGI, which can affect your eligibility for other tax benefits and credits.
One downside of an HSA is that it requires an HDHP, which can mean higher out-of-pocket costs before insurance kicks in. Also, if you don’t use the funds for qualified medical expenses, you’ll face taxes and a penalty on withdrawals before age 65.
If you contribute to your HSA with after-tax dollars, your HSA contributions are considered an above-the-line deduction, also known as an adjustment to income. This means you can deduct your contributions directly from your gross income, regardless of whether you itemize deductions or take the standard deduction. On the other hand, below-the-line deductions, also known as itemized deductions, are deducted after you calculate your adjusted gross income (AGI). Above-the-line deductions are beneficial because they lower your AGI, which can affect your eligibility for other tax benefits and credits.
The bottom line
If you meet the requirements to contribute to a health savings account (HSA), you can add money to the account and get a tax break. You can contribute up to the annual limit, which depends on whether you have self-only or family coverage, your age, and how many months you were HSA eligible. HSA contributions you make with after-tax dollars are tax-deductible, even if you take the standard deduction, as long as the money wasn’t already taken from your paycheck before taxes.
You have until the tax-filing deadline (usually April 15) to make HSA contributions for the prior year, so it’s important to keep track of any contributions you make after year end so you can report them correctly on your tax return.
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References
Internal Revenue Service. (2024). Publication 502 (2024), medical and dental deductions.
Internal Revenue Service. (2025). About Form 5498-SA, HSA, Archer MSA, or Medicare Advantage MSA information.
Internal Revenue Service. (2025). Form 8889.
Internal Revenue Service. (2025). Schedule 1 (Form 1040).
Internal Revenue Service. (2026). Topic no. 551, standard deduction.
Legal Information Institute. (2020). Itemized deductions. Cornell Law School.
Purcell, E. (2005). Section 125 — cafeteria plans. Office of Division Counsel, Internal Revenue Service.
