What Is the Max Contribution to an HSA?
Understand how your personal HSA contribution limit is determined. Learn the rules for calculating your maximum and managing your funds to avoid common, costly errors.
A Health Savings Account (HSA) is a tax-advantaged savings account used for healthcare expenses, available to individuals enrolled in a high-deductible health plan (HDHP). Funds contributed to an HSA are not subject to federal income tax at the time of deposit. The money can grow tax-free within the account, and withdrawals for qualified medical expenses are also tax-free.
HSA Contribution Limits
The Internal Revenue Service (IRS) sets the maximum amount of money that can be contributed to an HSA each year. For 2025, individuals with self-only HDHP coverage can contribute up to $4,300. Those with family coverage can contribute up to $8,550.
These contribution ceilings are comprehensive, meaning they include all money deposited into the account for the year. This total encompasses contributions made by the account holder, their employer, or any other third party. It is the responsibility of the account holder to monitor all contributions to ensure they do not exceed the annual limit.
Factors That Adjust Your Contribution Limit
Catch-Up Contributions
Individuals who are age 55 or older are permitted to contribute an additional amount over the standard annual limit. This provision, known as a catch-up contribution, allows for an extra $1,000 to be saved each year. This amount is fixed and does not adjust for inflation. If both spouses in a family plan are 55 or older, they can each make a $1,000 catch-up contribution but must do so in separate HSAs.
Mid-Year Eligibility and Prorated Contributions
When an individual becomes eligible for an HSA mid-year, their contribution limit for that year is prorated based on the number of months they were eligible. Eligibility is determined as of the first day of the month. For example, someone who enrolls in a qualifying HDHP on June 15 becomes eligible on July 1, allowing them to contribute for the remaining six months of the year.
An exception is the “last-month rule.” This IRS rule states that if you are an eligible individual on the first day of the last month of your tax year (December 1 for most people), you can contribute the full maximum for that year. To use this rule, you must remain HSA-eligible throughout a “testing period,” which runs for the entire following calendar year. Failing to maintain eligibility during this period results in the excess contribution becoming taxable income and subject to a 10% penalty.
Employer Contributions
Many employers offer contributions to their employees’ HSAs as part of their benefits package. Any funds an employer contributes directly to an employee’s account count toward the total annual contribution limit. For instance, if the family coverage limit is $8,550 and an employer contributes $1,000, the employee can only contribute an additional $7,550 for that year. The responsibility for tracking total contributions and staying within the IRS limits falls on the employee.
Contribution Deadlines and Rules
The deadline for making contributions to an HSA for a given tax year is the same as the federal tax filing deadline for that year, typically April 15 of the following year. This rule provides individuals with additional time beyond the end of the calendar year to maximize their contributions. For example, you can continue to make contributions for the 2024 tax year up until April 15, 2025.
When making a contribution between January 1 and the tax filing deadline, it is necessary to communicate with the HSA custodian or administrator. You must specify which tax year the contribution should be applied to—the current year or the prior year—to ensure funds are allocated correctly.
Handling Excess Contributions
An excess contribution occurs when the total amount deposited into an HSA exceeds the annual IRS limit. These overages are not tax-deductible and are subject to a 6% excise tax for each year they remain in the account. This penalty tax is calculated and reported to the IRS using Form 5329, Additional Taxes on Qualified Plans. The 6% tax applies annually until the excess amount is corrected.
To avoid the penalty, the excess contribution, along with any earnings it generated, must be withdrawn before the tax filing deadline for the year the excess contribution was made. For example, if you over-contributed by $500, you would need to withdraw that $500 plus any interest it earned. The process involves contacting the HSA administrator to request a “return of excess contribution.” The withdrawn earnings will be considered taxable income in the year they are withdrawn, and the financial institution will report the distribution on Form 1099-SA.
If the deadline is missed, the 6% tax will be owed, and the excess amount will continue to be subject to the tax in future years until it is removed or offset by a lower contribution in a subsequent year.