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How do employees save on taxes with an HSA?
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- How do employees save on taxes with an HSA?
- Account holders receive a "triple tax benefit":
- Reduce taxable income - HSA contributions through payroll are made pre-tax, which lowers tax liability on paychecks. Manual contributions are tax deductible when filing taxes each year.
- Tax-free earnings - Interest growth earned on HSA funds is never taxed.
- Tax-free distributions - HSA funds are not taxed when used for eligible expenses.