State Income Tax Information on
Health Savings Account

Health Savings Accounts offer generous deductions on Federal income tax for any deposits made to the account.  Most states also offer the same deductions on state income taxes.  However, since Health Savings Accounts were set up as a federal program, the individual states can choose to comply with the federal guidelines concerning tax treatment of Health Savings Accounts, or establish their own rules.

State Tax Treatment of Health Savings Accounts

States Following Federal HSA Tax Treatment

These states offer deductions on state income taxes for contributions to Health Savings Accounts.

Alabama Indiana Mississippi Oklahoma
Arizona Iowa Missouri Oregon
Arkansas Kansas Montana Pennsylvania
Colorado Kentucky Nebraska Rhode Island
Connecticut Louisiana New Mexico South Carolina
Delaware Maine New York Utah
Georgia Maryland North Carolina Virginia
Hawaii Massachusetts North Dakota Vermont
Idaho Michigan Ohio West Virginia
Illinois Minnesota Wisconsin

*Hawaii’s Act 89 (2004) conforms state taxes with federal law, as amended to Dec. 31, 2003.  Health Savings Accounts are included.  See HI-Ann. 2004-02.

State Legislation Needed for HSA Tax Treatment

States that have indicated that they must pass state legislation before Health Savings Accounts will receive a tax benefit at the state level.

California New Jersey

These two states also consider any interest or capital gains you earn in your HSA as taxable income.

No State Taxes on Health Savings Accounts

States not affected by federal income tax guidance

These states do not tax individuals on income, thus there is no income tax deduction when contributing to your HSA.

Alaska Nevada Texas
Florida South Dakota Washington
New Hampshire Tennessee Wyoming

Dividends and Interest Tax on HSA Accounts

These states do not tax income, and thus there is no state income tax deduction when contributing to an HSA. They do tax dividends and interest on HSA accounts if you make a taxable withdrawal from your account.

New Hampshire Tennessee

*In New Hampshire you must report these earnings if they amount to over $2400 filing individually, or $4800 if married filing jointly.

**In Tennessee you must report your dividend and interest earnings if they total over $1250 for the year, or $2500 if you are married filing jointly.

Disclaimer: HSA for America and its affiliates are not engaged in rendering tax, investment or legal advice. The information on this page may have inaccuracies, and federal and state tax regulations are subject to change. If tax, investment or legal advice is required, seek the service of a licensed professional.

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