HEALTH SAVINGS ACCOUNTS IN WI

HEALTH SAVINGS ACCOUNTS RECEIVE FAVORABLE TAX TREATMENT IN WISCONSIN

 

Wisconsin tax law was changed to treat Health Savings Account (HSA) contributions and earnings as tax-free for state income tax purposes. Effective for tax years beginning January 1, 2011, Wisconsin state tax law conforms to federal law regarding the tax treatment of HSA accounts. As a result:

  • Employer contributions to an employee’s HSA will no longer be treated as taxable income to employees for Wisconsin state tax purposes.
  • Employee contributions to HSA accounts made through a Section 125 cafeteria plan should be treated as pre-tax contributions for Wisconsin state tax purposes.
  • Earnings on HSA balances are no longer treated as taxable income for Wisconsin state tax purposes.
  • HSA distributions taken prior to January 1, 2011 for non-qualified medical expenses were not treated as taxable income for Wisconsin state tax purposes. However, due to this change, distributions after January 1, 2011 must be for qualified medical expenses in order to be tax-free.

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