Taxes // If you make a pretax contribution to your HSA,, it is not subject to federal income tax, Medicare tax or Social Security tax. If you pay on an after-tax basis, your contributions are subject to all of those taxes. However, when you file your tax return, you avoid paying federal income tax, but you are still responsible for Medicare or Social Security taxes. State income tax laws vary; therefore, check with your state revenue agency to know if your HSA funds are state – and, if applicable, local – tax free.