The IRS has announced an increase in the health savings account (HSA) contribution limit for 2025. The new limits are $4,300 for self-only coverage and $8,550 for family plans. In order to qualify for contributions, individuals must have an eligible high-deductible health insurance plan. There are three tax breaks associated with HSAs: an upfront deduction for contributions, tax-free growth, and no taxes on withdrawals for qualified medical expenses.
These accounts are triple-tax advantaged for medical expenses, providing significant benefits for those who contribute to them. The 2025 contribution limit for self-only health coverage has increased from $4,150 in 2024. For individuals with family coverage, the limit has also increased to $8,550 from $8,300 in 2024. The 2025 catch-up contribution for savers age 55 and older will be released later this year.
To be eligible to make HSA contributions, individuals must have a high-deductible health insurance plan with a minimum deductible of $1,650 for self-only plans or $3,300 for family coverage in 2025. HSAs offer three main tax benefits: an upfront deduction for contributions, tax-free growth on investments, and no taxes on withdrawals when used for qualified medical expenses.
Despite the benefits of HSAs, only 19% of participants invest their balance, while the majority leave their savings in cash according to a survey from the Plan Sponsor Council of America. It is important to take advantage of the tax breaks and potential growth opportunities offered by HSAs.