Senate Bill Introduced To Make Resident Contributions to Health Savings Accounts Exempt From State Taxes
Sen. Abel Maldonado (R-San Luis Obispo) on Wednesday reintroduced a bill (SB 173) that would exempt from state taxes contributions made by residents to health savings accounts, the San Luis Obispo Tribune reports (Huff, San Luis Obispo Tribune, 2/10).
Under the new Medicare law, HSAs are available to members of health plans that have a deductible higher than $1,000 for individuals and $2,000 for families. Employees, employers or both can contribute as much as a combined $2,600 annually for individuals and $5,150 annually for families for HSAs (California Healthline, 1/12).
California is one of 11 states that currently require residents to pay a state tax on funds contributed to HSAs. The bill, which likely will move to the Senate Appropriations Committee for consideration, would take effect on Jan. 1, 2006.
"Over six million Californians are without health care, and the cost of health care continues to skyrocket," Maldonado said, adding, "The HSA program is something that is proven to provide these people with affordable health care." In addition, Maldonado said that he plans to introduce legislation later this year that would provide tax credits to employers that contribute to HSAs for employees (San Luis Obispo Tribune, 2/10).