Updated October 5, 2026. Quick answer: No, for contributions you can deduct federally. The Department of Revenue’s Form 740-NP instructions list a “Health Savings Account (HSA) Deduction” on line 20 and say “Federal limitations apply”. The 2026 federal HSA limits are $4,400 for self-only coverage and $8,750 for family coverage.
Kentucky HSA tax treatment at a glance
| Item | What the documents say |
|---|---|
| Contributions | Deductible on Form 740-NP line 20, subject to the federal limitations; not also claimed as an itemized deduction |
| Earnings | Not stated in the documents read |
| Distributions | Not stated in the documents read |
| Where it is reported | Form 740-NP, line 20 (with federal Form 8889) |
| Federal HSA limits, 2026 | $4,400 self-only; $8,750 family |
| Source | Kentucky Department of Revenue; IRS Revenue Procedure 2025-19 |
What the Kentucky documents say
The 2025 Form 740-NP packet instructions, for part-year and nonresident filers, describe line 20, “Health Savings Account (HSA) Deduction”, in one sentence: “Federal limitations apply”. They add that contributions deducted by full-year nonresidents are limited to the share of total income that is Kentucky income, and tell the filer “Do not claim amounts as an itemized deduction”.
Earnings, distributions and the rest
The instructions read are the nonresident and part-year packet. They treat the HSA deduction as an adjustment to income with the federal limits and say nothing about HSA earnings or about distributions. The resident Form 740 instructions archived in the research for this page carry no HSA text, so this page does not describe the resident form.
A worked example at the 2026 family limit
An illustration, not a return: a filer with family coverage who makes the 2026 federal family limit of $8,750 as a deductible contribution is within the federal limitations the instruction refers to, so the line 20 deduction could be up to $8,750. That is $4,350 more than the self-only limit of $4,400 would allow. A full-year nonresident’s deduction is limited to the Kentucky share of total income, as described above.
What a mover should know
Every figure on this page is Kentucky’s own rule. If you moved during the year, or live in one state and work in another, check each state’s page and return, because the documents read here describe only Kentucky and none of them settles a part-year or two-state case. The federal side is the same everywhere: see CMG’s 2026 HSA contribution limits page, and state tax on HSA contributions for the other states checked.
What the documents do not say
- Only the Form 740-NP packet states the rule; the resident Form 740 instructions read have no HSA sentence. No Kentucky statute is cited. The documents read do not say how HSA earnings or distributions are treated. The instructions are for tax year 2025.
Common mistakes
- Claiming the same HSA amount on line 20 and as an itemized deduction; the instruction says not to.
- Taking a line 20 deduction larger than the federal limit allows; the instruction says federal limitations apply.
- Assuming the answer for one state applies to another, or that the state answer changes the federal limits.
Related: 2026 HSA contribution limits, state tax on HSA contributions, Kentucky retirement taxes, and how Kentucky taxes 401(k) and IRA withdrawals.
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Answer againSources
- 2025 Form 740-NP Packet Instructions: https://revenue.ky.gov/Forms/740-NP%20Packet%20Instructions%20(2025).pdf
- Revenue Procedure 2025-19 (Internal Revenue Service): https://www.irs.gov/pub/irs-drop/rp-25-19.pdf
Sources: the primary documents linked above, read on October 5, 2026. General information, not tax advice. Your own facts decide the outcome, and a tax professional or the state agency itself is the right place to confirm anything consequential.