HSA limits for 2023 Rise as Part of Tax Code Changes

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Tax Code Changes Due to Inflation

The Internal Revenue Service issued its annual inflation-adjusted amounts for next year’s health savings accounts. Due to surging inflation, the highest level in decades, they are raising the HSA limit. As part of 2023 tax code changes, Revenue Procedure 2022-24, states for calendar year 2023, the annual limitation on deductions for an individual with self-only coverage under a high deductible health plan is $3,850. That’s up a whopping $200 from $3,650 in 2022. Last year, the amount only climbed $50 from $3,600 in 2021. This is beneficial for 2023 tax preparation information

In 2023, the limitation on deductions for an individual, with family coverage, under a high deductible health plan is $7,750. That’s up a big $450 from $7,300 in 2022 and $7,200 in 2021. A high deductible health plan is (defined by the IRS)  a plan with an annual deductible no less than $1,500 for self-only coverage or $3,000 for family coverage. That includes annual out-of-pocket expenses (deductibles, co-payments and other amounts, but not premiums) that don’t exceed $7,500 for self-only coverage or $15,000 for family coverage. For reference, that is up from $1,400 in 2022 for self-only coverage and $2,800 for family coverage, and out-of-pocket expense limits of $7,050 for self-only coverage or $14,100 for family coverage in 2022.

It’s not just tax code changes, higher inflation adjustments are in keeping with surging inflation numbers. The Consumer Price Index climbed 8.5% in March compared to a year ago. The Labor Department reported March as the biggest increase since December 1981. The personal consumption expenditures price index rose to 6.6% in March. The Commerce Department’s Bureau of Economic Analysis recorded this as up from 6.4% in February, the steepest rise since 1981.