Best States for HSA Tax Savings
Health Savings Accounts (HSAs) offer a powerful triple tax benefit: tax-deductible contributions, tax-free growth, and tax-free withdrawals for medical expenses. But the total tax savings vary by state because state income tax deductions differ. California and New Jersey don't even offer a state deduction. This guide ranks states by total HSA tax advantage.
- California ranks #1 with the highest top tax rate at 13.30%.
- Wyoming ranks last at 0.00% — the lowest among all states.
- The leading 5 states are California, Hawaii, New York, New Jersey, Oregon.
- The ranking basis, source limitations, and calculation method are documented in the Methodology section below.
Top 3 States
All 50 States Ranked
Highest to lowest by top tax rate
| # | State | Top Tax Rate | Cost of Living | Median Income | Calculator |
|---|---|---|---|---|---|
| 1 | California | 13.30% | 140.5 | $100,149 | HSA Calculator |
| 2 | Hawaii | 11.00% | 184.8 | $100,745 | HSA Calculator |
| 3 | New York | 10.90% | 124.7 | $85,820 | HSA Calculator |
| 4 | New Jersey | 10.75% | 118.8 | $104,294 | HSA Calculator |
| 5 | Oregon | 9.90% | 109.6 | $85,220 | HSA Calculator |
| 6 | Minnesota | 9.85% | 93.4 | $87,117 | HSA Calculator |
| 7 | Massachusetts | 9.00% | 147.8 | $104,828 | HSA Calculator |
| 8 | Vermont | 8.75% | 113 | $82,730 | HSA Calculator |
| 9 | Wisconsin | 7.65% | 97.4 | $77,488 | HSA Calculator |
| 10 | Maine | 7.15% | 114.6 | $76,442 | HSA Calculator |
| 11 | Connecticut | 6.99% | 114.2 | $96,049 | HSA Calculator |
| 12 | Delaware | 6.60% | 101.7 | $87,534 | HSA Calculator |
| 13 | Maryland | 6.50% | 121.1 | $102,905 | HSA Calculator |
| 14 | Rhode Island | 5.99% | 111.2 | $83,504 | HSA Calculator |
| 15 | New Mexico | 5.90% | 89.9 | $67,816 | HSA Calculator |
| 16 | Virginia | 5.75% | 99.1 | $92,090 | HSA Calculator |
| 17 | Montana | 5.65% | 105.9 | $75,340 | HSA Calculator |
| 18 | Kansas | 5.58% | 87.6 | $75,514 | HSA Calculator |
| 19 | Idaho | 5.30% | 101.7 | $81,166 | HSA Calculator |
| 20 | South Carolina | 5.21% | 91.9 | $72,350 | HSA Calculator |
| 21 | Alabama | 5.00% | 85 | $66,659 | HSA Calculator |
| 22 | Georgia | 4.99% | 90.6 | $79,991 | HSA Calculator |
| 23 | Illinois | 4.95% | 95.1 | $83,211 | HSA Calculator |
| 24 | Missouri | 4.70% | 88.6 | $71,589 | HSA Calculator |
| 25 | West Virginia | 4.58% | 87.9 | $60,798 | HSA Calculator |
| 26 | Nebraska | 4.55% | 91.3 | $76,376 | HSA Calculator |
| 27 | Oklahoma | 4.50% | 83.5 | $66,148 | HSA Calculator |
| 28 | Utah | 4.50% | 100.6 | $96,658 | HSA Calculator |
| 29 | Colorado | 4.40% | 101.8 | $97,113 | HSA Calculator |
| 30 | Michigan | 4.25% | 93.9 | $72,389 | HSA Calculator |
| 31 | Mississippi | 4.00% | 86.2 | $59,127 | HSA Calculator |
| 32 | North Carolina | 3.99% | 96.6 | $73,958 | HSA Calculator |
| 33 | Arkansas | 3.90% | 89.1 | $62,106 | HSA Calculator |
| 34 | Iowa | 3.80% | 88.6 | $75,501 | HSA Calculator |
| 35 | Kentucky | 3.50% | 92.5 | $64,526 | HSA Calculator |
| 36 | Pennsylvania | 3.07% | 96.2 | $77,545 | HSA Calculator |
| 37 | Louisiana | 3.00% | 91.1 | $60,986 | HSA Calculator |
| 38 | Indiana | 2.95% | 88.3 | $71,959 | HSA Calculator |
| 39 | Ohio | 2.75% | 93.7 | $72,212 | HSA Calculator |
| 40 | Arizona | 2.50% | 107.6 | $81,486 | HSA Calculator |
| 41 | North Dakota | 2.50% | 90.7 | $77,871 | HSA Calculator |
| 42 | Alaska | 0.00% | 129 | $95,665 | HSA Calculator |
| 43 | Florida | 0.00% | 100.7 | $77,735 | HSA Calculator |
| 44 | Nevada | 0.00% | 100.7 | $81,134 | HSA Calculator |
| 45 | New Hampshire | 0.00% | 110.1 | $99,782 | HSA Calculator |
| 46 | South Dakota | 0.00% | 94.1 | $76,881 | HSA Calculator |
| 47 | Tennessee | 0.00% | 88.9 | $71,997 | HSA Calculator |
| 48 | Texas | 0.00% | 90.7 | $79,721 | HSA Calculator |
| 49 | Washington | 0.00% | 114.6 | $99,389 | HSA Calculator |
| 50 | Wyoming | 0.00% | 93.7 | $75,532 | HSA Calculator |
Methodology
How we collected and ranked the data
States ranked by top marginal income tax rate (descending). Higher-tax states provide more state-level HSA tax savings. California and New Jersey are noted as exceptions — they don't offer state HSA deductions despite high taxes. Data from IRS, Tax Foundation.
Newsletter Signups Are Paused
We're building the email delivery behind our newsletter so we can do it properly — signups aren't open yet. Check back soon.
No form here and nothing is collected. Read our privacy policy.
Compare Two States
Compare taxes, housing, cost of living, and more between any two states.
View all 107 state comparisonsFrequently Asked Questions
What is the HSA triple tax advantage?
HSAs offer three tax benefits: (1) Contributions are tax-deductible (federal + most states + FICA), (2) Investments grow tax-free, and (3) Withdrawals for qualified medical expenses are tax-free. No other account offers all three. After age 65, you can withdraw for any purpose (taxed like a traditional IRA).
Do all states offer HSA tax deductions?
No. California and New Jersey do not offer a state income tax deduction for HSA contributions. In these states, you still get the federal deduction and FICA savings, but miss out on the state tax benefit. All other states with income tax provide the deduction.
What is the 2026 HSA contribution limit?
For 2026, the HSA contribution limit is $4,400 for self-only coverage and $8,750 for family coverage. Those 55 and older can contribute an additional $1,000 catch-up. These limits include both employee and employer contributions.
What is the HSA contribution limit for 2027?
The IRS announced 2027 HSA limits in Rev. Proc. 2026-24: $4,500 for self-only coverage and $9,000 for family coverage, increases of $100 and $250 respectively over 2026. The $1,000 age-55+ catch-up is fixed by statute and does not change. The same Rev. Proc. also raised the qualifying high-deductible health plan minimum deductible to $1,750 (self-only) / $3,500 (family) and the maximum out-of-pocket limit to $8,700 / $17,400 for 2027.