HSA Excess Contributions: How to Fix Them
An excess contribution is any amount above your HSA limit, including employer contributions. A 6% excise tax applies each year. You can avoid it by withdrawing the excess by tax filing deadline.
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Short answer
An excess contribution is any amount over the IRS limit, from you or your employer combined. A 6% excise tax applies each year it stays in the account. To avoid it, withdraw the excess and its earnings by your tax filing deadline.
Excess contributions usually come from an employer deposit you didn't count, a life change that shrinks your limit mid-year, or a second HSA you forgot about. The fix is a withdrawal request to your HSA provider, then the earnings go on your tax return as other income.
What an HSA excess contribution is
An excess contribution is any amount credited to your HSA that goes over the IRS annual limit for your coverage type. IRS Publication 969 defines the rule plainly: the limit is the maximum total you can contribute in a calendar year from all sources combined. For 2026, that limit is $4,400 for self-only coverage or $8,750 for family coverage. Both your own contributions and your employer's contributions count toward that single number.
The excess counts money from every source: payroll deductions, deposits you made yourself, employer contributions, and catch-up contributions if you're 55 or older. Every dollar counts, and the combined total can't pass the limit.
An excess contribution is different from non-qualified spending. Spending on an ineligible expense creates an income tax problem plus a 20% additional tax before age 65. An excess contribution happens when too much money goes in.
The 6% excise tax: how it works
Publication 969 is blunt: "Generally, you must pay a 6% excise tax on excess contributions." The tax hits the excess only, not your whole balance. And it repeats, because the excise tax "applies to each tax year the excess contribution remains in the account."
You figure the tax on Form 5329. The Form 8889 instructions point there too: "Code section 4973 imposes a 6% tax on excess contributions to an HSA." Say you're $1,000 over. That's $60 for the first year. Leave the $1,000 in the account and you owe another $60 the next year, and the year after that.
Where the tax shows up on your return
The Form 5329 instructions walk through the HSA excess line. If you withdraw the excess by the deadline, there's no excess left to tax. If you don't, the tax follows you onto each year's return until the money comes out.
Common causes of excess contributions
Most excess contributions come from a handful of patterns.
Employer contributions you didn't count
Your employer's deposits count toward the same limit as yours. A $1,200 employer seed plus a full payroll election can push you over before December.
Losing eligibility mid-year, and the pro-rated limit
You enroll in Medicare, drop your high deductible plan, or pick up a second health plan. Your limit shrinks to the months you were eligible, so contributions that kept flowing become excess. For Medicare, Publication 969 is short: "your contribution limit is zero" from the first month you are enrolled. Our HSA and Medicare guide covers that case.
The last-month rule and its testing period
The last-month rule lets you contribute the full-year limit if you're eligible on December 1. It comes with a catch. If you stop being eligible during the testing period, you "will have to include in income the total contributions made to your HSA that wouldn't have been made except for the last-month rule," per Publication 969. Those dollars can also draw the 6% tax.
Two HSAs
You open a second HSA at a different bank and fund both. One annual limit covers every account you own.
A mid-year life change
Marriage, a new baby, or a spouse's plan can change your coverage type and your limit. Update your payroll election when it happens, not in December.
How to fix an excess contribution
Pull the extra money out before your filing deadline and the tax never applies. Publication 969 lists the condition: "You withdraw the excess contributions by the due date, including extensions, of your tax return for the year the contributions were made." You also take out the income the excess earned.
Step-by-step fix
Calculate the excess. Add every contribution from every source (you, your employer, catch-up) and subtract your limit for the months you were eligible.
Call your HSA provider. Ask for a withdrawal of an excess contribution and for the earnings on that amount since it went in.
Request the withdrawal of the excess plus those earnings. Providers use different names and forms for this, so ask what theirs is called.
Report the earnings. Publication 969 says you "include the earnings in 'Other income'" for the year you withdraw. The Form 8889 instructions cover the rest of the HSA reporting.
Keep the provider's confirmation with your tax records.
Deadline: the tax filing deadline, including extensions
For most people that's April 15 of the year after the over-contribution. A filing extension pushes the deadline out with it. Start well before the date, since providers can take days to process a request.
Worked example: $600 over the 2026 limit
Dana has self-only coverage, so her 2026 limit is $4,400. Between her payroll election and a year-end employer deposit, her HSA receives $5,000. She's $600 over.
What Dana owes
Item | Amount |
|---|---|
Total contributions in 2026 | $5,000 |
2026 self-only limit | $4,400 |
Excess contribution | $600 |
6% excise tax if the $600 stays in (each year) | $36 |
Earnings on the $600 (her provider's figure, say) | $20 |
The fix
In February 2027 Dana asks her provider to withdraw $620, the $600 excess plus the $20 it earned. She's well ahead of the April 15, 2027 filing deadline. She reports the $20 as other income on her return. With the excess out in time, she owes no excise tax. Had she left it, she'd owe $36 for 2026, another $36 for 2027, and so on.
If you do not correct an excess contribution
Leaving an excess in place costs you every year. In Dana's case, $600 over means $36 annually, $360 over ten years, and the excess is still sitting there.
It also keeps showing up on your return until you withdraw it. Fixing it late is still better than never fixing it, so ask your provider about a withdrawal now.
HSA excess contributions and Medicare
Enrolling in Medicare stops new HSA contributions from the first month of enrollment. Publication 969 is short: "your contribution limit is zero" from the first month you are enrolled. The zero limit also reaches back to any earlier Medicare start date, so check your Part A start date and look for contributions made since then. Those are excess.
Tell your employer to stop HSA contributions when you enroll, and set your own election to zero. Your existing balance stays yours and stays spendable on qualified expenses.
Related pages on HSA rules and limits
For a full overview of how much you can contribute each year and what counts, see the HSA contribution limits guide. If you lose HSA eligibility because of a Medicare enrollment, HSA and Medicare explains the coverage and contribution rules. And if you are looking for the broader rules on HSA spending and withdrawals, HSA distributions and withdrawals covers what happens when money comes out.
Where Burst fits
Where a purchase needs a letter of medical necessity to be reimbursed (gym memberships, massage, fitness and recovery equipment, sleep products), Burst writes the letter and files the claim. $35, refunded if no letter is issued or the claim is denied. See how a letter works.
Frequently asked questions
What happens if I over-contribute to my HSA by accident?
You owe a 6% excise tax on the excess for each year it stays in the account. You can avoid it by withdrawing the excess and its earnings by your tax filing deadline, including extensions.
How much time do I have to fix an excess contribution?
You must withdraw the excess and its earnings by the due date of your tax return for the year you over-contributed, including any extensions. For most people, that is April 15 of the following year. A filing extension moves that date with it.
Can my employer's contribution be an excess contribution?
Yes. Your employer's HSA contributions count toward your annual limit, just like your own. If your employer contributes more than expected and you also contributed from your paycheck, you could end up over the limit. Ask your employer to stop contributions immediately if you think this happened.
Do I owe tax on the earnings if I withdraw in time?
Yes. Publication 969 says to include the earnings on the withdrawn contributions in "Other income" for the year you withdraw. Withdrawing in time is what removes the 6% excise tax.
What form do I use to report an excess contribution to the IRS?
The Form 8889 instructions cover HSA reporting. The 6% excise tax on any excess left in the account is figured on Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts.
Does the last-month rule protect me from an excess contribution?
Only if you stay eligible. The last-month rule lets you contribute the full limit if you're eligible on December 1, but you have to remain eligible through the testing period or include those extra contributions in income.
Keep reading: HSA Contribution Limits, HSA Distributions and Withdrawals, HSA and Medicare, How Much to Contribute to an HSA, and all guides on this topic.
Sources
IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans (Excess contribution definition, 6% excise tax, withdrawal deadline, Medicare enrollment and contribution limit, last-month rule and testing period)
Instructions for Form 8889, Health Savings Accounts (HSAs) (Reporting excess contributions and excise tax on Form 8889 and Form 5329)
Instructions for Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts (Form 5329 line instructions for reporting the 6% excise tax on HSA excess contributions)
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