If you have a Health Savings Account (HSA) or are thinking about one, the IRS has announced the new contribution limits for 2026. These annual inflation adjustments are designed to keep pace with rising costs.
However, it's worth noting that HSAs might not be right for everyone.
So, as you plan your finances for next year, it’s good to know the new limits and the pros and cons of an HSA. Let's dive in.
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.
2026 HSA and HDHP limits: What’s new?
For 2026, the IRS has set the following annual HSA contribution limits:
- Individual (self-only) coverage: $4,400 (up from $4,300 in 2025)
- Family coverage: $8,750 (up from $8,550 in 2025)
- Catch-up for age 55+: $1,000 (unchanged)
Category | 2025 Limit | 2026 Limit |
|---|---|---|
Self Only HSA | $4,300 | $4,400 |
Family HSA | $8,550 | $8,750 |
Catch-up 55 + | $1,000 | $1,000 |
Remember: To qualify for an HSA, you must be enrolled in a high-deductible health plan (HDHP).
The IRS also adjusted the minimum deductible and maximum out-of-pocket amounts for HDHPs for 2026:
- Minimum deductible: $1,700 for individuals, $3,400 for families
- Maximum out-of-pocket: $8,500 for individuals, $17,000 for families
Key benefits of an HSA
HSA limits are adjusted annually for inflation.
HSAs are popular for their triple tax benefits. Basically, contributions are made pre-tax, the money grows tax-free, and withdrawals for qualified medical expenses are also tax-free.
Unlike flexible spending accounts (FSAs), HSA balances roll over from year to year and can be invested, allowing funds to grow for future needs. You own your HSA and keep it and the funds in it when you leave your job.
After age 65, you can use HSA funds for non-medical expenses without penalty (though you’ll pay regular income tax on those withdrawals).
Is there a downside to an HSA?
However, HSAs are not without their downsides. The most significant is the requirement to enroll in a high-deductible health plan. While those plans often have lower monthly premiums, they come with higher upfront costs if you need care.
For instance, next year (2026), you’ll need to pay at least $1,700 out of pocket before your insurance starts to pay for most services, or $3,400 for a family. (In many cases, the deductible limits are much higher than those minimums.)
Those out-of-pocket costs can be a significant financial strain for people with ongoing health needs or limited savings. Some people might even delay necessary care due to concern about upfront costs.
There are also strict rules about how HSA funds can be used.
- If you spend HSA money on anything other than qualified medical expenses before age 65, you’ll face income tax and a 20% penalty on the amount withdrawn.
- That's a steeper penalty than what applies to early withdrawals from many retirement accounts.
- Over-contributing to your HSA can also result in tax penalties.
Managing an HSA requires record-keeping. You should keep receipts and documentation to show that withdrawals were for eligible expenses. You could owe taxes and penalties if the IRS audits you and cannot provide proof.
Eligibility is another limitation. You can’t contribute to an HSA if you’re enrolled in Medicare or are claimed as someone else’s dependent. You also can’t have a general-purpose FSA at the same time as an HSA.
Finally, the full benefits of an HSA are only realized by those who can afford to contribute and invest consistently. Setting aside enough to take advantage of long-term tax savings may be challenging for people living paycheck to paycheck.
HSA tax planning for 2026: Bottom line
As you review your options for the coming year, weigh the practical considerations involved with HSAs.
The new limits for 2026 offer more opportunity to save, but only if the structure of an HDHP and HSA rules fit your health and financial situation.
Consult a trusted and qualified financial planner or tax professional if you're unsure.
Read More
-
6 Ways AI Can Improve Your Financial LifeWhile they can't replace human advisers, AI-based tools can take some of the guesswork out of financial tasks — from budgeting to filing taxes and investing.
-
I Didn't Get My REAL ID in Time for the Deadline. What Can I Use at the Airport?Alternative forms of ID to use at airports if you didn't get a REAL ID in time for the May 7 deadline.
-
Retirees: Don’t Miss These Valuable State Tax Breaks in 2025Retirement Planning Selecting the right state for retirement can significantly impact your financial well-being.
-
Trump’s Tax Cut Risks Your SNAP, Medicaid BenefitsTax Cuts The GOP budget blueprint could slash lifesaving programs for millions of U.S. households.
-
Missed Tax Day? Nearly One Million Taxpayers Still Can File and Claim Valuable Tax RefundsTax Refunds As many as one million taxpayers could be missing out on a significant tax refund.
-
Which Generation Pays the Most Tax in the US?Tax Burden Polls show that most people feel like taxes are unfair. But which age group bears the brunt of the tax burden in the United States?
-
How the Trump Harvard Tax-Exempt Threat Could Impact YouTax Law Trump's latest higher education showdown raises fundamental questions that could reach beyond Harvard's nonprofit tax status.
-
Tax Day 2025: Don’t Miss These Freebies, Food Deals and DiscountsTax Day You can score some sweet deals on April 15 in some select restaurants like Burger King, Shake Shack, and more.
-
Tax Time: Does Your Kid Influencer Owe Taxes?State Tax Some minors are making big money on social media. Here’s how to know if they need to file taxes.
-
Did Florida’s Chance at $1,000 in Property Tax Rebates Vanish?State Taxes The Florida Legislature bypassed Gov. Ron DeSantis’ wish to cut property taxes and instead voted to lower the state’s sales tax.
