Triple Tax Advantage = The HSA

You’ve likely heard about the tax benefits of Roth IRAs and 401(k)s, but did you know there’s an account that offers even greater tax advantages?

Enter the Health Savings Account (HSA) - a financial powerhouse with a unique triple-tax advantage that can supercharge your savings:

1️⃣ Tax Deferral

Contributions are made with pre-tax dollars, reducing your taxable income and even avoiding FICA taxes when funded via payroll.

2️⃣ Tax-Free Growth

Funds in your HSA grow tax-free, whether through interest or investments, helping your savings compound more efficiently.

3️⃣ Tax-Free Use

Withdrawals for qualified medical expenses are completely tax-free, making healthcare costs significantly more affordable.

And there’s more… unlike Flexible Spending Accounts (FSAs), HSAs don’t have a “use-it-or-lose-it” rule. Your balance rolls over year after year, allowing the funds to grow alongside your investments.

For high-income earners, investing HSA dollars can be an especially savvy strategy to maximize long-term growth. I like to call this the tax-free 401(k) for your healthcare needs in retirement.

Fidelity’s Learning Center has an article on what is an HSA and how does it work.

For 2025, the HSA contribution limit increased to $4,300 for an individual, up from $4,150 in 2024. You can contribute up to $8,550 to a family HSA for 2025, up from $8,300 in 2024.

If you’re not leveraging an HSA, you’re missing out on one of the most powerful tools in your financial toolkit.