HSA Tax Benefits in Alabama (2026)
Alabama follows federal HSA tax treatment. Contributions are deductible, growth is tax-free, and qualified withdrawals are tax-free.
State Income Tax
2%–5%
HSA Deduction
Yes
Growth Tax-Free
Yes
How Alabama Treats HSAs
Alabama conforms to the federal tax treatment of HSAs. Contributions to your HSA are deductible on your Alabama state income tax return. Investment gains within the account grow tax-free, and withdrawals for qualified medical expenses are not taxed at the state level.
Alabama HSA FAQs
Are HSA contributions tax-deductible in Alabama?
Yes. Alabama follows federal HSA tax treatment, so contributions are deductible on your state income tax return.
What is the state income tax rate in Alabama?
Alabama's state income tax rate is 2%–5%.
Is HSA investment growth taxed in Alabama?
No. Alabama follows federal treatment — investment growth inside your HSA is not subject to state income tax.
This information is for general guidance only and does not constitute tax advice. State tax laws change frequently. Consult a tax professional for advice specific to your situation.
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