How to Fill Out Form 8889 for Your HSA: A 2026 Line-by-Line Guide

To fill out Form 8889, report your own HSA contributions in Part I and compare them with your annual limit, then report withdrawals from Form 1099-SA in Part II, and use Part III only if you used the last-month rule or an IRA funding distribution and later lost HSA eligibility. The deduction from line 13 goes to Schedule 1 of Form 1040, and any taxable withdrawals and penalties flow to Schedules 1 and 2.

This guide shows how to fill out Form 8889 for the 2026 tax year, the return most people will file in spring 2027. Line numbers below follow the 2025 revision of the form, so check them against the 2026 form before you file.

Who Has to File Form 8889

The Instructions for Form 8889 list four triggers. You must file if you, your employer or anyone else contributed to your HSA, if your HSA made a distribution, if you failed to stay an eligible individual during a testing period, or if you inherited an interest in an HSA.

The form is required even when your only contributions came through payroll and already appear on your W-2, and any distribution requires it even if you have no other reason to file.

To be an eligible individual, you need HDHP coverage on the first day of a month and no other health coverage apart from disregarded coverage such as dental, vision or permitted insurance. You also cannot be enrolled in Medicare or be claimed as someone else's dependent.

2026 HSA Limits and HDHP Minimums

Rev. Proc. 2025-19 sets the 2026 figures. These are the numbers you will use on the 2026 Form 8889.

If you are preparing a late 2025 return, the 2025 limits were $4,300 for self-only coverage and $8,550 for family coverage.

OBBBA Changes That Affect Who Can Contribute

The One Big Beautiful Bill Act, signed July 4, 2025, widened HSA eligibility in three ways. The IRS explained each one in Notice 2026-5.

Bronze and catastrophic plans count as HDHPs. For months beginning after December 31, 2025, a bronze or catastrophic plan is treated as an HDHP if it is available as individual coverage through an Exchange, even if its deductible or out-of-pocket maximum falls outside the table above. A plan bought off-Exchange still qualifies if the same plan is offered on an Exchange. Bronze plans offered to small employers through SHOP generally do not qualify under this rule.

Direct primary care no longer blocks contributions. Starting in 2026, membership in a direct primary care service arrangement does not make you ineligible, provided the fees for all such arrangements do not exceed $150 per month ($300 if the arrangement covers more than one person). You can also pay those fees from your HSA tax-free. Fees above the monthly cap can still be reimbursed from the HSA, but they disqualify you from contributing while you are enrolled.

Telehealth before the deductible is permanent. An HDHP can cover telehealth and other remote care with no deductible without losing HDHP status. The fix applies to plan years beginning after December 31, 2024, so for calendar-year plans it covers both 2025 and 2026 returns.

On Form 8889 these changes mostly affect line 1 and line 3, because they change which months count as eligible.

How to Fill Out Form 8889 Part I: Contributions and Deduction

Part I works out your deduction and any excess. Gather your W-2 and Form 5498-SA first. Your HSA custodian must send Form 5498-SA by May 31 of the following year, according to the Instructions for Forms 1099-SA and 5498-SA, so it often arrives after you file.

Line 1. Check self-only or family. If you held both at different times, check the one in effect longer. If you had family coverage on December 1, check family.

Line 2. Enter contributions you made yourself for the tax year, including any made by the April filing deadline of the following year. Leave out employer contributions, payroll contributions through a Section 125 cafeteria plan, rollovers, and IRA funding distributions. The IRS treats pre-tax payroll deferrals as employer money.

Line 3. If you were under 55 and eligible with the same coverage on the first day of every month, enter $4,400 (self-only) or $8,750 (family) for 2026. If you were 55 or older and unmarried, or married with self-only coverage, add $1,000 here. If your eligibility changed during the year and the last-month rule does not apply, use the monthly worksheet in the instructions: enter the limit for each month you were eligible on the first day, add the months, and divide by 12.

Line 4. Enter Archer MSA contributions from Form 8853, if any. Most filers enter zero.

Line 5. Subtract line 4 from line 3.

Line 6. Usually the same as line 5. Spouses with separate HSAs and family coverage share one family limit. They split it equally unless they agree on a different split.

Line 7. If you were married, 55 or older, and either spouse had family coverage, enter your $1,000 catch-up here (prorated by eligible months). Each spouse must contribute their catch-up to their own HSA.

Line 8. Add lines 6 and 7.

Line 9. Enter employer contributions, which appear in Form W-2 box 12 with code W. This figure already includes your pre-tax payroll contributions. Employer HSA money is one of the fringe benefits excluded from income up to your limit. Any excess employer contribution missing from W-2 box 1 is reported as other income.

Line 10. Enter any qualified HSA funding distribution, a direct transfer from a traditional or Roth IRA, generally allowed once per lifetime. It is excluded from income, is not deductible, and reduces your remaining limit.

Lines 11 and 12. Add lines 9 and 10, then subtract the total from line 8. Line 12 is the room left for your own contributions.

Line 13. Enter the smaller of line 2 or line 12. This is your HSA deduction, and it goes on Schedule 1 (Form 1040), Part II, line 13. It reduces income whether or not you itemize, which makes it different from the medical expense deduction on Schedule A for itemized deductions.

If line 2 is larger than line 13, the difference is an excess contribution.

Excess Contributions and the 6% Tax

Section 4973 imposes a 6% excise tax on excess HSA contributions, and Publication 969 notes that it applies for each year the excess stays in the account. You figure it on Form 5329, not on Form 8889.

You can avoid the tax by withdrawing the excess and its earnings by the due date of your return, including extensions, as long as you do not deduct the withdrawn amount. The custodian reports the return on Form 1099-SA with code 2, and the earnings are other income for the year you withdraw them.

Common causes of excess contributions:

• Counting payroll deferrals on line 2 and then contributing the full limit again outside payroll.
• Contributing for months after Medicare enrollment starts. Your limit is zero from the first month of Medicare, including months covered by retroactive enrollment.
• Spouses each contributing the full family limit to separate HSAs.
• Direct primary care fees above $150 a month ($300 for an arrangement covering more than one person), which end eligibility for those months.

If you filed on time without fixing an excess, the instructions allow a withdrawal up to six months after the original due date, followed by an amended return marked "Filed pursuant to section 301.9100-2."

Part II: Distributions Reported on Form 1099-SA

Part II reports what came out of the account. Your custodian reports each withdrawal on Form 1099-SA, with the gross amount in box 1 and a distribution code in box 3.

Line 14a. Enter total distributions from box 1 of all your Forms 1099-SA.

Line 14b. Enter amounts rolled over to another HSA within 60 days, plus excess contributions and earnings you withdrew by the return due date. A direct trustee-to-trustee transfer is not a distribution at all and should not appear here.

Line 14c. Subtract line 14b from line 14a.

Line 15. Enter distributions used for qualified medical expenses for you, your spouse and your dependents that were not reimbursed elsewhere and were incurred after the HSA was opened. Direct primary care fees qualify. You cannot also deduct these amounts on Schedule A.

Line 16. Subtract line 15 from line 14c. This is taxable and goes on Schedule 1, line 8f.

Lines 17a and 17b. The taxable amount carries an additional 20% tax unless the distribution came after you died, became disabled, or turned 65. Check 17a if an exception applies, and enter 20% of the rest on line 17b, which flows to Schedule 2, line 17c.

Part III: The Last-Month Rule and the Testing Period

The last-month rule lets you contribute the full annual limit if you are eligible on December 1, even if you were not eligible earlier in the year. The catch is a testing period that runs from December 1 of that year through December 31 of the following year. If you lose eligibility during that window for any reason other than death or disability, the extra contribution becomes taxable.

Line 18. Use the monthly worksheet to work out what you could have contributed without the last-month rule, and enter the difference between that and what you contributed.

Line 19. Enter any IRA funding distribution if you failed its own testing period, which starts in the month of the transfer.

Lines 20 and 21. Line 20 is the total income (Schedule 1, line 8f). Line 21 is a 10% additional tax (Schedule 2, line 17d). Report both on the return for the year you lost eligibility, which is usually the year after the contribution.

Example: Marcus, age 40, starts self-only HDHP coverage on December 1, 2026, and contributes the full $4,400 for 2026 under the last-month rule. In May 2027 he takes a job with a non-HDHP plan, inside the testing period. Without the rule, his 2026 limit would have been one month's worth: $4,400 ÷ 12 = $366.67. On his 2027 Form 8889 he reports $4,033.33 on line 18 ($4,400 minus $366.67), and owes a 10% additional tax of $403.33 on top of regular income tax.

Worked Example: A Full 2026 Form 8889

Dana is 56, unmarried, and bought a bronze plan through the Exchange for all of 2026. Under OBBBA that plan counts as an HDHP. Her employer put $2,500 into her HSA through payroll (W-2 box 12, code W), and she contributed $3,400 directly. She withdrew $1,800 during the year, as shown in box 1 of her Form 1099-SA with code 1. She spent $1,500 on qualified medical expenses and $300 on a non-medical purchase.

Dana's total contributions were $5,900 ($3,400 plus $2,500) against a $5,400 limit, so $500 is an excess contribution. If she leaves it in the account, Form 5329 shows a 6% excise tax of $30, and that tax repeats every year the $500 remains. If she withdraws the $500 and its earnings before her 2026 return is due, she avoids the excise tax. She also adds $300 to income on Schedule 1, line 8f, and $60 to Schedule 2, line 17c, because she is under 65 and no exception applies.

Filing Tips for Couples, Heirs and Preparers

Married couples with two HSAs file two Forms 8889, one per spouse, and combine the line 13 amounts on Schedule 1. An heir who is not the surviving spouse enters the account's value at death on line 14a and writes "Death of HSA account beneficiary" across the top of the form. A surviving spouse named as beneficiary treats the HSA as their own.

For tax practices, Form 8889 sits inside the wider 1040 preparation workflow. A useful intake step is to ask each client about Medicare or direct primary care enrollment. Self-employed clients who fund their own HSA claim the deduction on the same Schedule 1 line, and it fits alongside the other deductions for 1099 contractors.

Frequently Asked Questions

What is the HSA contribution limit for 2026? The limit is $4,400 for self-only HDHP coverage and $8,750 for family coverage, under Rev. Proc. 2025-19. If you are 55 or older by year end, you can add $1,000.

Do I need Form 1099-SA to fill out Form 8889? Yes, if you took any distribution. Box 1 of Form 1099-SA feeds line 14a, and the code in box 3 tells you whether the amount is a normal withdrawal, a return of excess contributions, or a death or disability distribution.

Can a bronze plan make me eligible for an HSA in 2026? Yes. For months beginning after December 31, 2025, a bronze or catastrophic plan available as individual coverage through an Exchange is treated as an HDHP, even if its deductible is below the usual minimum. SHOP bronze plans offered by small employers generally do not qualify under this rule.

What happens if I lose HDHP coverage after using the last-month rule? The contributions you could not have made without the rule become taxable income in the year you lose eligibility, plus a 10% additional tax. You report them in Part III, lines 18, 20 and 21. Losing eligibility because of death or disability does not trigger this.

Next Step

Madras Accountancy supports US CPA firms and their clients with outsourced tax preparation, bookkeeping and review work, including individual returns with HSA reporting. To talk about how we can help during busy season, contact our team.