When Does Your HSA Contribution Limit Reset?
Clarify the timing for your annual HSA contributions. Understand the difference between when the limit resets and the final deadline to fund your account.
A Health Savings Account (HSA) is a tax-advantaged savings account for healthcare expenses, available to those with a high-deductible health plan (HDHP). It allows you to set aside pre-tax money for qualified medical costs. This article clarifies when your annual contribution limits reset, the final deadline for making contributions, and how to manage your account within Internal Revenue Service (IRS) guidelines.
Annual HSA Contribution Limits
The IRS sets the maximum amount you can contribute to your HSA each year, and these limits are subject to annual inflation adjustments. For 2025, the contribution limit for an individual with self-only HDHP coverage is $4,300. For those with family HDHP coverage, the limit is $8,550.
If you are age 55 or older, you are permitted to contribute an additional $1,000 per year. This “catch-up” contribution is designed to help older account holders bolster their savings. The annual limit applies to the total of all contributions made to your account, which includes any funds contributed by an employer.
The Contribution Deadline
A point of flexibility in the HSA rules relates to the contribution timing. While the new contribution limit becomes available on January 1st, the deadline to make contributions for a specific tax year extends beyond December 31st. You have until the federal income tax filing deadline of the following year to make your contributions, which is typically April 15th.
This extended window allows for a “prior-year contribution.” For example, you have until April 15, 2025, to make contributions that count toward your 2024 limit. When making a contribution between January 1st and the tax deadline, you must instruct your HSA administrator which tax year the funds should be applied to so they are recorded correctly on Form 8889.
Handling Excess Contributions
Contributing more than the IRS-allowed annual limit results in an excess contribution, which can lead to tax penalties. The IRS imposes a 6% excise tax on the excess amount for each year that it remains in your account. This tax is reported using IRS Form 5329.
The penalty continues to apply annually until the excess is removed. To avoid this penalty, you must withdraw the excess contribution before you file your federal income tax return for the year. When you withdraw the excess, you must also withdraw any net income or earnings attributable to that excess amount, and these earnings must be reported as “Other income” on your tax return.
Contribution Rollovers and Account Balance
The concept of a “reset” applies only to your annual contribution limit, not to the funds already in your account. The entire account balance, including all contributions and any investment earnings, rolls over from one year to the next. Your funds do not expire and remain in your account until you use them for qualified medical expenses.
This feature distinguishes HSAs from Flexible Spending Accounts (FSAs), which often have a “use-it-or-lose-it” rule. With many FSAs, you must spend the funds by the end of the plan year or you forfeit the money, although some employers may offer a short grace period or a limited carryover amount. The indefinite rollover capability of an HSA makes it a powerful long-term savings vehicle.