IRS Increases Limits for This Tax-Free Account for 2025

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Patient talking to a doctor
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The annual contribution limits for health savings accounts will rise again in 2025.

After raising the limits in each of the past several years, the IRS has announced that it will raise them again for 2025 to account for inflation.

The new limits are:

  • $4,300 for someone with self-only health insurance coverage (up from $4,150 for 2024).
  • $8,550 for someone with family coverage (up from $8,300 for 2024).

The IRS did not announce any change to the limit for catch-up contributions. These extra contributions allow folks who are 55 or older at the end of the tax year to save an additional $1,000 per year in an HSA. So, for 2025, someone who is at least 55 can contribute a total of $5,300 or $9,550 to an HSA, depending on what type of plan they have.

The rising annual contribution limits are great news for anyone who is eligible to use an HSA, as this type of account offers a combination of tax-reducing features that is unrivaled, even by retirement plans like 401(k)s or individual retirement accounts.

What is a health savings account?

An HSA is an account into which you can deposit a certain amount of money each year to be used to reimburse yourself for eligible medical expenses.

You also may be able to use an HSA as a savings account or an investment account, depending on the account custodian.

Money Talks News partner Lively is an example of an HSA custodian that gives account holders the option to invest the money they put in their HSA in mutual funds and similar types of investments. However, again, not all custodians allow account holders to invest.

As we explain in “3 Ways a Health Savings Account Can Improve Your Finances,” HSAs offer a trio of tax advantages:

  • Your contributions are tax-deductible in the tax year for which they are made.
  • Gains on your contributions are tax-free.
  • Your withdrawals are tax-free if you use them to pay for qualifying health care expenses.

In other words, you will never owe taxes on money that goes through an HSA, provided that you follow the IRS rules for HSAs. Not even a retirement account like a Roth IRA offers that degree of lawful tax avoidance.

Additionally, you do not need to earn income to contribute to an HSA, unlike most retirement accounts.

Who is eligible for a health savings account?

The bad news about HSAs is that not everyone is eligible for one. They’re designed to be used by folks with high-deductible health insurance plans.

For 2025, the IRS defines such plans as having annual deductibles of at least:

  • $1,650 for self-only coverage (up from $1,600 in 2024)
  • $3,300 for family coverage (up from $3,200 in 2024)

For 2025, such plans also must have annual out-of-pocket expenses — defined as “deductibles, co-payments and other amounts, but not premiums” — of no more than:

  • $8,300 for self-only coverage (up from $8,050 for 2024)
  • $16,600 for family coverage (up from $16,100 for 2024)

There are a few other limitations on who can have an HSA. For example, folks on Medicare are ineligible.

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