Extension Explains Potential Tax Savings From Medical Care Savings Accounts

Montana residents looking to reduce their state income taxes while preparing for current and future health care costs can take advantage of a Montana Medical Care Savings Account.

In the 2025 calendar year, MSA account holders are eligible to deposit up to $4,600 to be used for eligible medical and long-term health care expenses. The amount of the deposit can be deducted from an individual’s state taxable income, resulting in financial savings.

Joint accounts, even between spouses, are not permitted.

MSAs are available to all Montana resident taxpayers ages 18 and older, regardless of existing coverage through employer plans, flexible spending accounts or federal health savings accounts. Unlike federal HSAs, a high-deductible health plan is not a prerequisite.

Withdrawals from MSAs are tax-free when used for eligible medical costs as defined under IRS Section 213(d), including medical insurance premiums, prescription drugs, medical and dental services, nursing home care, eyeglasses, crutches and transportation for medical care.

Goetting said that while MSAs reduce state taxable income, they do not offer federal income tax benefits.

Withdrawals for eligible MSA expenses must be completed by Jan. 15 of the following year.

For more details about Montana MSAs, visit a local MSU Extension office, access the MontGuide online or by searching store. msuextension.org for the term “MSA.”