Contributions to Health Savings Accounts (HSAs) are no longer taxable for Wisconsin state income tax purposes. On January 24, 2011, Wisconsin Governor Scott Walker signed the 2011 Wisconsin Act 1 which brings Wisconsin into line with federal laws exempting HSA contributions from taxation. Wisconsin had been one of four states that did not allow tax deductible contributions to HSAs. HSAs are becoming more popular as more employers are choosing high deductible health plan (HDHP) coverages to control health plan costs. HSA accounts remain with an employee if they switch employers or terminate employment. Employees can contribute to an employer-sponsored HSA or establish their own HSA to pay for qualified medical expenses on a tax-free basis.

The change to Wisconsin law is effective as of January 1, 2011. Contact your Starr Group representative to find out more about HSAs, how this law may affect an employer’s payroll system and to learn more about increased penalties in the event HSAs are used for non-qualified medical expenses.