The IRS Just Announced Higher HSA Limits—But Only 10% of Accounts Are Set Up for the Most Valuable Tax Break

By Sabrina Karl | Originally posted on Investopedia

Health savings accounts (HSAs) are best known for making medical costs less painful, letting eligible savers set aside pre-tax money and use it tax-free for qualified expenses. But an HSA can be more than a healthcare spending account—it can become a long-term wealth-building tool when savers use its powerful “triple tax advantage.”

The third advantage is where the vast majority of accounts fall short. While most HSA owners make tax-free contributions and tax-free withdrawals, few take it to the next level of investing their HSA dollars so the money can also grow tax-free over time.

The IRS's newly announced 2027 contribution limits are a fresh reminder that eligible savers may be leaving one of an HSA's biggest benefits untouched.

How Much More You Can Put in an HSA in 2027

The IRS has announced the HSA contribution limits for 2027, and eligible savers will be able to put away slightly more than they can in 2026. To contribute to an HSA, you must be enrolled in an HSA-eligible high-deductible health plan.

For self-only coverage, the limit will rise to $4,500 in 2027, up from $4,400 in 2026. For family coverage, the limit will increase to $9,000, up from $8,750.1 The $1,000 catch-up contribution for people age 55 and older will remain unchanged.