IRS Health Savings Account Updates for 2026
Posted by Kathryn Mellon on May 27, 2025
HSA Defined
A Health Savings Account (HSA) is a tax-advantaged savings account designed to help individuals save for medical expenses.
- Eligibility: To open an HSA, you must be enrolled in a High-Deductible Health Plan (HDHP)
- Contributions: Both individuals and employers can contribute to the account. Contributions are made with pre-tax dollars, reducing taxable income
- Tax Benefits: HSAs offer triple tax advantages:
- Pre-Tax Contributions: Contributions reduce your taxable income
- Tax-Free Growth: Earnings on the funds in the account grow tax-free
- Tax-Free Withdrawals: Withdrawals for qualified medical expenses are tax-free
- Qualified Expenses: Funds can be used for a wide range of medical expenses, including copays, prescriptions, dental care, and vision care
- Portability: The account remains with you regardless of changes in employment
- IRS Form 8889, Health Savings Accounts
2026 Updates
Inflation-Adjusted Amounts
- Individual Coverage: Annual contribution limit increased to $4,400 (up from $4,300 in 2025)
- Family Coverage: Annual contribution limit increased to $8,750 (up from $8,550 in 2025)
- Catch-Up Contribution: Additional $1,000 for those aged 55 or older
- View IRS Rev. Proc. 2025-19
High-Deductible Health Plan (HDHP) Requirements
- Self-Only Coverage: Minimum annual deductible of $1,700 (up from $1,650 in 2025)
- Family Coverage: Minimum annual deductible of $3,400 (up from $3,300 in 2025)
- Out-of-Pocket Expenses: Maximum of $8,500 for self-only coverage and $17,000 for family coverage (up from $8,300 and $16,600, respectively, in 2025)
Advantages of HSAs
- Tax Benefits:
- Pre-Tax Contributions: Contributions to HSAs are made with pre-tax dollars, reducing taxable income
- Tax-Free Growth: Earnings on HSA funds grow tax-free
- Tax-Free Withdrawals: Withdrawals for qualified medical expenses are tax-free
- Portability: HSAs remain with the account holder regardless of employment status
Contact our Client Accounting Services Team for more information.
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Katie joined Lumsden McCormick with nearly fourteen years of experience specializing in corporate and personal tax returns, preparation of financial statements, and managing accounting services for a variety of entities. She assists clients with the financial and operational management of day to day business.