The HSA bill was the first piece of legislation signed into law by Governor Scott Walker as 2011 Wisconsin Act 1. It passed the Senate with a vote of 21-12 and the Assembly with a vote of 66-28. The measure retroactively took effect as of January 1, 2011.
This legislation signed into law in February of 2011, provides a nonrefundable state income tax credit to individuals who make contributions to health savings accounts (HSA). The credit is in the amount of 6.5 percent of the allowable amount that the individual claims as a federal tax deduction for a contribution to an HSA, or 6.5 percent of the federal tax-exempt earnings relating to an HSA, or both. The contributions that an individual pays into the HSA are excluded from that person’s income. Any earnings from an HSA or employer contributions are excluded from that person’s income for state tax purposes.
“Farmers and other self-employed individuals in Wisconsin will now be able to deduct this cost for health care, just as other employers have been able to do,” said Paul Zimmerman, Executive Director of Governmental Relations for the Wisconsin Farm Bureau. “This brings fairness for those who purchase their own health insurance coverage rather than accessing it through employers.”
“The benefits of this new law are two-fold,” Zimmerman said. “Consumers win with lower costs associated with health insurance.”
“Additionally, these reduced costs free up dollars to be invested and spent elsewhere within the economy,” Zimmerman said.
Wisconsinites with HSAs should now see their health care costs lowered by 6.5 percent, the amount they will be able to deduct from their state income tax liability.
HSAs allow people with high-deductible health insurance plans to save a limited amount of money for future health expenses. Their taxable income is reduced by the amount they put into the HSA. A 2010 survey of Wisconsin dairy farmers by the National Agricultural Statistics Service notes the largest proportion of insured farmers (46 percent) purchased individual policies directly from private insurance companies; while 11.5 percent of dairy farm families reported no coverage at all. Wisconsin had been one of only four states still taxing contributions to HSAs since the federal government made them exempt from federal taxation in 2003.
The Wisconsin Legislature’s passage of a tax deduction for Health Savings Accounts (HSA) was a matter of fairness for farmers and other self-employed individuals. The Wisconsin Farm Bureau Federation has long been a strong supporter of this tax deduction for HSA contributions. Thank you to the members of the State Legislature and Governor Walker for aligning Wisconsin with the federal government’s stance on tax exemption for HSAs.