Health Savings Account (HSA)
Definition
A triple-tax-advantaged savings account available to those with high-deductible health plans (HDHPs). Contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses are tax-free. For 2025, contribution limits are $4,300 for self-only coverage and $8,550 for family coverage, with an additional $1,000 catch-up contribution for age 55+. Unused funds roll over year to year and the account is portable.
Example
Contributing $4,300 to an HSA in the 22% bracket saves you $946 in income tax plus $329 in FICA taxes—$1,275 in total tax savings—while building a medical emergency fund.
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