IRS Sets 2025 HSA Contribution Limits by Brendan Kurpis, CPA
The IRS has released the inflation-adjusted limits that qualifying taxpayers may contribute to health savings accounts (HSAs) in 2025. These triple-tax-advantaged accounts can help participants afford the rising costs of healthcare today and save for even higher expenses during retirement.
Background
HSAs are powerful healthcare savings tools that provide participants with the following tax benefits:
- Tax-free contributions are excluded from participants’ taxable income.
- Contributions are invested to grow tax-free.
- Withdrawals taken for qualifying healthcare expenses are not subject to tax.
To participate in these accounts, individuals must be covered by high-deductible health plans (HDHPs) for which the annual deductibles in 2025 are at least $1,650 for self-coverage with no more than $8,300 in annual out-of-pocket expenses. For family coverage, the minimum deductible is $3,300, with a maximum of $16,600 in out-of-pocket costs. Additionally, taxpayers may qualify to participate in an HSA when they lack other health coverage (subject to exceptions) and are neither enrolled in Medicare nor claimed as dependents on someone else’s income tax return.
2025 Contribution Limits
The maximum amount that can be contributed to an individual’s HSA account in 2025 is $4,300, a $150 increase from 2024. For family coverage, the maximum contribution is $8,550, up from $8,300 last year. Participants aged 55 and older may contribute an additional $1,000 to their HSAs, regardless of whether they have individual or family coverage. This amount does not change from year to year with inflation. Still, individuals should note that the age at which they may qualify for these catch-up contributions is five years older than the age at which they may make catch-up contributions to their 401(k) and IRA retirement accounts.
HSAs can play a critical role in retirement planning, helping individuals cover the costs of Medicare premiums or the tax-qualified costs of a long-term care insurance policy. While withdrawals taken for non-medical expenses before age 65 incur federal and state taxes and a 20 percent penalty, those taken at age 65 and beyond escape penalties. Moreover, individuals may pass their HSAs to surviving spouses, who can also enjoy all the tax benefits that come with them.
About the Author: Brendan Kurpis, CPA, is an associate director of Tax Services with Berkowitz Pollack Brant Advisors + CPAs, where he helps entrepreneurs and high-net-worth individuals implement federal and state tax compliance strategies that protect wealth and minimize tax liabilities. He can be reached at the CPA firm’s New York, N.Y. office at (646) 213-7600 or info@bpbcpa.com.
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