The HSA offers three types of tax savings:
1. You won’t pay federal income and FICA taxes on the money contributed to your account.
2. You won’t pay federal income and FICA taxes on the money you use from your account to pay for eligible expenses.
3. Your HSA balance will earn interest, tax-free, every year.
If you live in Alabama, California or New Jersey, your HSA contributions are subject to state income tax.