A Health Savings Account (HSA) is a tax-advantaged savings account designed to help individuals save for medical expenses. HSA contributions are tax-deductible, and the funds can be used to pay for qualified medical expenses without incurring federal taxes. For 2025, the IRS has increased the contribution limits for HSAs.
Revenue Procedure 2024-25 outlines the new limits under Section 223 of the Tax Code and the maximum amounts for health reimbursement arrangements (HRAs) under Section 54.9831-1(c)(3)(viii) of the Pension Excise Tax Regulations.
Key Adjustments for 2025:
- HSA Deduction Limits:
- Self-only coverage: $4,300 (up from $4,150 in 2024).
- Family coverage: $8,550 (up from $8,300 in 2024).
- High-Deductible Health Plans (HDHP):
- Minimum annual deductible:
- Self-only coverage: $1,650 (up from $1,600).
- Family coverage: $3,300 (up from $3,200).
- Maximum out-of-pocket expenses (excluding premiums):
- Self-only coverage: $8,300 (up from $8,050).
- Family coverage: $16,600 (up from $16,100).
- Minimum annual deductible:
- Excepted Benefit HRAs:
- Maximum contribution for the planned year: $2,150 (up from $2,100).
These adjustments are made annually to account for inflation and to ensure that HSAs remain effective tools for managing healthcare costs. By increasing the contribution limits and adjusting the deductible and out-of-pocket maximums, the IRS aims to help individuals better prepare for medical expenses while also enjoying the tax benefits associated with HSAs. In summary, the updated limits for 2025 provide more opportunities for individuals to save on a pre-tax basis for future medical expenses, making HSAs an even more attractive option for managing healthcare costs.
