Excess HSA Contributions: the 6% Tax and the Fix
An excess HSA contribution is taxed 6% for every year it stays in the account. Withdrawing it with its earnings before the return deadline avoids the tax.
An excess HSA contribution carries a 6% excise tax for every tax year it stays in the account. Withdraw it, and the income it earned, by the return’s due date including extensions, and the tax does not apply.
The HSA contribution limit calculator shows the ceiling. This page covers what happens after the ceiling is crossed.
What makes a contribution excess
Publication 969: “You will have excess contributions if the contributions to your HSA for the year are greater than the limits discussed earlier. Excess contributions aren’t deductible.”
The limit being tested is the prorated one, not the headline annual figure. It also counts every source: your payroll deductions, your own deposits and your employer’s contributions all land inside the same ceiling. For 2026 the annual figures being prorated are $4,4001 for self-only coverage and $8,7502 for family coverage, plus $1,0003 if you are 55 or older at year end.
An excess can arise several ways. Fewer eligible months than expected, on the proration rules. A coverage change from family to self-only partway through the year. An employer contribution the employee did not count. Or a backdated Medicare start date, which makes past contributions excess retroactively — see HSA and Medicare.
The tax, and how long it runs
Publication 969: “Generally, you must pay a 6% excise tax on excess contributions. See Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts, to figure the excise tax. The excise tax applies to each tax year the excess contribution remains in the account.”
It is not a one-time charge. An excess left alone is taxed again every year until it stops being an excess.
Form 5329 is where it is computed. Part VII of the form covers excess contributions to health savings accounts, and the Instructions for Form 5329 list among those who must file anyone whose contributions “to your traditional IRAs, Roth IRAs, Coverdell ESAs, Archer MSAs, HSAs, or ABLE accounts exceed your maximum contribution limit”.
The way out, and the deadline
Publication 969 gives two conditions, both of which must be met:
- “You withdraw the excess contributions by the due date, including extensions, of your tax return for the year the contributions were made.”
- “You withdraw any income earned on the withdrawn contributions and include the earnings in ‘Other income’ on your tax return for the year you withdraw the contributions and earnings.”
The Instructions for Form 5329 apply the same test at line 47. The withdrawal counts if you “make the withdrawal by the due date, including extensions” of the return for the year in question.
The earnings are not optional and they are not tax-free. They come out with the excess and go into income for the year of the withdrawal.
This is a different transaction from an ordinary distribution. An ordinary withdrawal for medical costs does not remove an excess; only a withdrawal that takes out the excess together with the income it earned, inside the deadline, meets both of Publication 969’s conditions.
Two different deadlines, and they are not the same date
Contributions for the 2026 tax year may be made until April 15, 20274, the filing deadline without extensions. An extension to file does not extend the time to contribute.
The deadline to remove an excess does move with an extension. Publication 969 and the Instructions for Form 5329 both fix it at “the due date, including extensions”, of the return for the year the contribution was made.
So a taxpayer who extends their 2026 return has until the extended date to withdraw a 2026 excess, and had only until April 15, 20274 to add to the account in the first place.
Leaving the excess in the account
There is a second exit, and it is slower. Publication 969 lets you deduct an earlier excess in a later year, capped at the lesser of two amounts: “your maximum HSA contribution limit for the year minus any amounts contributed to your HSA for the year”, and “the total excess contributions in your HSA at the beginning of the year”.
In effect the excess is absorbed by unused room in a later year. The 6% excise tax is charged for each tax year it is still in the account before that happens.
What is the penalty for over-contributing to an HSA?
A 6% excise tax on the excess, charged for each tax year it remains in the account. Publication 969 sends you to Form 5329 to figure it.
How do I remove an excess HSA contribution?
Withdraw the excess contributions and “any income earned on the withdrawn contributions” before the deadline. Publication 969 requires both to come out, with the earnings reported in “Other income” for the year of the withdrawal.
What is the deadline to withdraw an excess HSA contribution?
The due date of your return for the year the contribution was made, including extensions. That is the wording in both Publication 969 and the Instructions for Form 5329.
Do I pay the 6% tax again next year?
Yes, if the excess is still there. Publication 969 states that “the excise tax applies to each tax year the excess contribution remains in the account”.
Which form reports an excess HSA contribution?
Form 5329, Part VII. Contributions and distributions themselves are reported on Form 8889, which is filed with your return in either case.
Can next year’s limit absorb an excess?
Yes. Publication 969 allows an earlier excess to be deducted in a later year, limited to the lesser of your unused room for that year and the total excess in the account at the start of it.
Is a failed testing period an excess contribution?
No. A last-month-rule failure is handled as an income inclusion plus an additional tax, not as an excess, and no withdrawal fixes it.
Open the HSA calculator →Sources
Information, not advice. This is the reading version; the interactive calculator and the full page are at https://thresholds.pages.dev/hsa/excess-contributions/.