As tax season approaches, many taxpayers look for last-minute ways to reduce their tax liability and increase their IRS refund. Two of the most powerful tools at your disposal—even as late as Tax Day—are contributions to a Health Savings Account (HSA) or a Traditional Individual Retirement Account (IRA). Both types of contributions can lower your taxable income and deliver immediate tax savings. In this guide, we’ll explain how to take advantage of these last-minute strategies and why they matter.
What Is a Last-Minute Contribution?
Although the calendar year ends on December 31, the IRS allows contributions to HSAs and IRAs to be made up until the tax filing deadline in April of the following year (typically April 15). This means that even after the year has ended, you can still make a contribution that counts for the prior tax year and claim a deduction on your current tax return.
Example: You can contribute to an HSA or Traditional IRA by April 15, 2026, and have it apply to your 2025 tax return.
Traditional IRA Contributions and Deduction Benefits
A Traditional IRA allows you to save for retirement with the added benefit of potentially reducing your taxable income. Contributions are generally deductible from your gross income, which lowers your Adjusted Gross Income (AGI) and can boost your refund.
2025 Contribution Limits for Traditional IRA
- Under age 50: Up to $7,000
- Age 50 or older: Up to $8,000 (includes $1,000 catch-up contribution)
Who Can Deduct IRA Contributions?
The deductibility of your IRA contributions depends on whether you or your spouse is covered by a retirement plan at work and your income level.
- Single filers: Full deduction if MAGI is under $77,000; phased out up to $87,000
- Married filing jointly: Full deduction if MAGI is under $123,000; phased out up to $143,000
You can claim the deduction on Schedule 1 (Form 1040), Line 20, and it flows through to Line 10 of your Form 1040.
Health Savings Account (HSA) Contributions
HSAs are a triple-tax-advantaged account available to individuals enrolled in a high-deductible health plan (HDHP). Contributions to an HSA are deductible, grow tax-free, and can be withdrawn tax-free for qualified medical expenses.
2025 HSA Contribution Limits
- Individual coverage: $4,150
- Family coverage: $8,300
- Catch-up (age 55+): Additional $1,000
Contributions made before the tax deadline (e.g., April 15, 2026) can be designated for the 2025 tax year, offering immediate tax benefits.
Reporting HSA Contributions
Report HSA contributions on Form 8889, which flows to Schedule 1, Line 13. These contributions also reduce your AGI, increasing eligibility for other tax credits.
Last-Minute Contribution Strategy to Boost Refunds
Making a last-minute contribution to an IRA or HSA not only reduces your taxable income but may also increase your eligibility for income-sensitive tax credits, such as:
- Earned Income Tax Credit (EITC)
- Premium Tax Credit (for health insurance subsidies)
- Saver’s Credit (for lower-income IRA contributors)
Lower AGI can also impact student loan repayment calculations and financial aid eligibility.
How to Make a Last-Minute Contribution Correctly
When making an IRA or HSA contribution between January 1 and April 15, you must notify your bank or brokerage firm that the contribution is for the prior tax year. This ensures it’s recorded properly for IRS reporting purposes.
- Use online account settings to select the correct tax year
- Get a confirmation or Form 5498 showing the contribution for the correct year
- Double-check with your provider if you’re mailing a check or using a third-party platform
Which Account Should You Choose: HSA or IRA?
Both accounts offer excellent tax benefits, but choosing the right one depends on your circumstances:
- Use an HSA if you have a high-deductible health plan and anticipate medical expenses
- Use a Traditional IRA if you’re saving for retirement and meet the income limits for a deduction
- Use both if you want to maximize deductions and have enough funds to contribute to both accounts
Example: Refund Boost from a Last-Minute Contribution
Sarah, a single filer earning $60,000 in 2025, owes $2,000 in federal taxes. Before filing, she contributes $5,000 to a Traditional IRA and $2,000 to her HSA. Her AGI drops to $53,000, qualifying her for the Saver’s Credit and reducing her tax bill by over $1,500. Instead of owing $2,000, she now expects a refund of $300 due to additional withholding.
Deadline Reminders
- IRA and HSA contributions for the 2025 tax year are due by April 15, 2026
- Even if you file an extension, the contribution deadline does not extend
- Make sure contributions are clearly labeled as applying to the previous tax year
Common Mistakes to Avoid
- Assuming Roth IRA contributions are deductible—they are not
- Forgetting to report HSA contributions made outside of payroll
- Not specifying the tax year for a contribution made between January and April
- Exceeding annual contribution limits without catch-up eligibility
Conclusion
Don’t leave money on the table. If you’re filing your taxes and want to reduce your tax liability or increase your refund, consider making a last-minute contribution to an HSA or Traditional IRA. These contributions are simple to execute, offer immediate tax benefits, and help set you up for a healthier financial future. Act before the tax deadline, verify that your contributions are applied correctly, and enjoy the dual benefits of reducing your taxes and investing in your long-term goals.
