Here’s How HSAs Could Change Under the New Tax Bill
By Chris Morris | Originally posted on Inc.
If the bill passes, you could use a health savings account to pay for the gym. Other big changes are also being proposed.
The status of Trump’s tax and spending bill is still anything but certain. If it passes, though, it could prove to be a windfall for people who have health savings accounts (or HSAs).
The bill passed the House of Representatives a little over a week ago. It’s now facing some opposition in the Senate, which will begin debate next month. But if it’s passed as currently written, HSAs could become accessible to a wider group of people and be used for new medical expenses.
HSAs are currently available to people with certain high-deductible health insurance plans. The insurance plan needs to meet certain IRS qualifications, including a deductible—the amount members need to spend out of pocket before insurance begins to pick up some of the bill—of at least $1,650 for singles and $3,300 for a family. They’ve become a popular choice for some employers and employees because the plans can have lower monthly premiums. Younger people and those who have lower annual medical expenses are especially enthusiastic about HSAs, since the money saved doesn’t expire at the end of the year, like a flexible spending account.
For 2025, the maximum HSA contribution is $8,550 for a family and $4,300 for singles. (If you’re 55 and older, you can kick in an additional $1,000 in catch-up contributions.) It can be a triple win for people who have one. You get a tax break for contributing (lowering your taxable income). The money you put into the account can be invested and grow tax-free. And when you withdraw funds, assuming it’s for an unreimbursed medical expense, you don’t have to pay taxes on that either.
What changes would the bill bring? Here’s what you need to know.
Will HSA contribution limits be increased?
Yes, substantially—if you qualify. The annual contribution limits for individuals and families would be double the 2025 limits for some people, increasing by $4,300 for individuals (to $8,600) and by $8,550 for families (to $17,100). The increases would phase out at certain income levels ($75,000 for individuals and $150,000 for joint filers with family coverage). Individuals making over $100,000 or families making more than $200,000 would not see adjustments in their contribution limits.
How would the tax bill expand HSAs?
As it’s current written, the new tax bill would open HSAs up to approximately 20 million additional people (from the 60 million who currently have one). Individuals would be able to qualify for an HSA even if they’re covered by a direct primary care arrangement (where they pay a doctor a fixed amount for unlimited primary care) or an employee clinic.