The IRS has announced the Health savings account (HSA) contribution limits for 2025. While the increases are modest compared to the record-high HSA limit increase for 2024, they still offer significant tax benefits.
Here’s what you need to know now to plan for the coming year.
2025 annual HSA contribution limits
HSAs offer a way to save and invest for healthcare spending. You can use your health savings account funds for various qualified medical expenses, including deductibles, copayments, and prescriptions. Additionally, for those 65 and older, HSA funds can be used to pay Medicare premiums.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
To be eligible to contribute to an HSA, you must be enrolled in an HSA-qualified high deductible health plan (HDHP) and not be enrolled in Medicare.
Note: For 2025, the IRS has updated the definition of an HDHP: a plan must have a minimum annual deductible of $1,650 for individual coverage (up from $1,600 in 2024) or $3,300 for family coverage (up from $3,200 in 2024).
- For individuals with self-only coverage under an HDHP, the annual HSA contribution limit will rise to $4,300 for 2025, up from $4,150 this year.
- The limit for those with family coverage increases to $8,550 for 2025, up from $8,300 for 2024.
For those 55 and older, by the end of the calendar year, there is an additional catch-up contribution.
(This allows you to contribute even more towards healthcare savings, which can be helpful as healthcare expenses often increase with age.)
Right now, the HSA catch-up contribution is $1,000.
HSA tax benefits
It’s often said that HSAs offer a triple tax advantage: contributions are tax-deductible, and earnings grow tax-free. Additionally, withdrawals for qualified medical expenses are tax-free.
Another advantage of HSAs is that, unlike traditional retirement accounts, there are no required minimum distributions (RMDs). That allows the funds to grow tax-free for as long as they remain in the account.
However, it should also be noted that, as Kiplinger reported, the Consumer Financial Protection Board (CFPB) recently cited some "hidden costs of HSAs" that it says account holders should be aware of. For more information, see Tax Benefits and Hidden Costs of HSAs.
HSA max contribution: Bottom line
While the 2025 HSA contribution limit increases are not as significant as for 2024, they still provide an opportunity to work on your retirement savings strategy and potentially reduce your tax burden.
Consult with a financial advisor or tax planner if you need help determining how to integrate your HSA into your broader financial plan.
Related
-
A Checklist for Retiring in 2025Navigating the final stretch of your professional career can be daunting. We've compiled a checklist to help you put your best foot forward into retirement.
-
Leave Your Life Story as a Legacy for Your HeirsHere are eight resources to help pass your life story on to your family. How do you want to be remembered?
-
Tax Pros: Is Someone Fraudulently Filing Returns With Your PTIN?Tax Filing An unmonitored preparer tax identification number (PTIN) can lead to serious issues.
-
Can Tariffs Make Childcare More Affordable?Tariffs President-elect Trump suggested tariffs can address the childcare crisis, but economists are doubtful.
-
Are You a Renter? You Could Save on TaxesTax Breaks With these tax savings at your fingertips, rent may be more affordable
-
2025 Open Enrollment: Some DACA Recipients Can Purchase Affordable Care Act Health InsuranceOpen Enrollment Your eligibility to purchase health insurance from the federal marketplace may have changed. Here's what you need to know.
-
Holiday Office Party Taxes: Know Before You GoTax Tips The IRS could tax your gifts from Christmas raffles, Secret Santa, and White Elephant. Here’s how.
-
New Mexico Small Business Saturday Tax Holiday 2024Tax Holiday Here's how you can save on taxes during New Mexico’s Small Business Saturday.
-
Holiday Shopping Tax Tips for Business OwnersTax Deductions Before hitting the sales, businesses should know these key deductions and look out for overspending.
-
NYC Congestion Pricing: Ghost Tax or Necessary Fee?State Taxes Drivers headed to Manhattan’s downtown district will face a new $9 toll in January.
