Maximize Tax Savings with IRAs & HSAs Before Tax Day

As Tax Day fast approaches, now is the perfect time to take stock of opportunities to reduce your tax burden while growing your savings. Two often-overlooked tools, the Individual Retirement Account (IRA) and the Health Savings Account (HSA), offer unique tax advantages that can significantly impact your financial health. Whether you're planning for retirement or managing healthcare costs, maximizing your contributions to these accounts before April 15, 2025, is a step worth taking.

 

Maximize Your IRA Contributions

For the 2024 tax year, you can make contributions to your IRA until April 15, 2025. The annual contribution limits are $7,000 for those under 50 and $8,000 for individuals aged 50 and older. Contributing to an IRA can potentially offer tax deductions based on your income and filing status, effectively reducing your taxable income while bolstering your retirement savings.

If you haven’t already, consider verifying your eligibility for a Roth IRA or traditional IRA. This step ensures that you’re making the most informed decision when it comes to maximizing these benefits.

 

Contribute to Your HSA

The Health Savings Account (HSA) provides triple tax benefits: tax-deductible contributions, tax-free withdrawals for qualifying medical expenses, and tax-free growth. For the 2024 tax year, the deadline for contributions is also April 15, 2025.

The contribution limits for an HSA are set at $4,150 for individual coverage and $8,300 for family coverage, with an additional catch-up contribution of $1,000 for those aged 55 and older. An HSA is a valuable tool for saving towards both short-term medical costs and long-term healthcare needs. Unspent funds can continue to grow over time, offering a significant savings vehicle.

Consult with a financial advisor or tax professional to ascertain eligibility and contribution limits. By acting before April 15, 2025, you can maximize these savings strategies. Double-check your account balances and make contributions sooner rather than later to avoid the last-minute rush.