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What are the tax benefits of a health savings account (HSA)?

There are several tax benefits of a health savings account (HSA), an account or trust you set up with a qualified HSA trustee to pay or reimburse certain medical expenses you incur.
  1. Regular contributions to your HSA are tax deductible (unless they're made through payroll deduction).
  2. The money in an HSA grows tax-free; the interest earned is not taxable. 
  3. If you withdraw funds from your HSA to pay for eligible health expenses, you do not have to pay income taxes on that money.
  4. Contributions to your HSA made by your employer (including contributions made through a cafeteria plan, when available) may be excluded from your gross income, lowering your taxable income.
Because HSAs don’t have a “use it or lose it” provision, HSAs can provide an opportunity for you to build tax-free savings for health costs now or in the future.

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Important: This content reflects information from various individuals and organizations and may offer alternative or opposing points of view. It should not be used for medical advice, diagnosis or treatment. As always, you should consult with your healthcare provider about your specific health needs.