Hi, so I started my first full time job in July 2025 and learned that I should use a HSA since I wouldn’t get taxed on gains, etc. So I have been making my own contributions from my paycheck and maxing it out.
But I just got to know that NJ treats HSA as taxable brokerage, but I made investments in HSA over the minimum balance needed in the account. So now, I am worried since I invested in VTSAX which resulted in gains, dividends, etc. but I don’t want to deal with the hassle of manually reporting in tax form each year. So should I just sell all of my investments right now and report/get taxed in 2026 return and from now on, just keep the balance in cash wherein I don’t have to report in my tax form since I heard there are still some benefits I get? I don’t want to manually report each year since it can be very annoying from what I’ve read.
Thanks!
HSA Investments Made in NJ (Thought it was tax free)
byu/Future_CS intax
Posted by Future_CS
3 Comments
correct NJ does not confirm to the federal tax on HSA. A HSA is still a great investment vehicle and has great tax savings if uses correctly. I Think you should consider the advantages before closing the account.
Since NJ treats the HSA as a regular taxable account, you must track and report interest, dividends, and realized gains/losses. I’m guessing you have a very small 2025 tax liability from dividends.
You still get the benefits on your federal return. If it is too burdensome to you to pick up your December statement and include annual gains and income on your New Jersey return, then most definitely ignore the investment benefits of your HSA and move everything to cash.