The HSA Last-Month Rule: How IRC §223(b)(8) Lets a Freelancer Who Switches to an HDHP in December Deduct a Full Year of HSA Contributions

Published: September 30, 2026 · Reading time: 12 min

TL;DR: Every HSA explainer says the contribution limit is prorated by the month — true, under IRC §223(b)(2), for the general case. §223(b)(8), the "full contribution rule" (IRS Notice 2008-52's own name for it), works the opposite way: if you're covered by a qualifying HDHP on December 1, you're treated as if that coverage had run the entire year — so a freelancer who only becomes HSA-eligible in the year's last month can still deduct the full annual limit, not just the fraction of it the calendar would otherwise allow. In the worked example below, a freelance designer who picks up self-only HDHP coverage effective December 1, 2026 deducts $4,400.00 instead of the $366.67 ordinary proration would allow — a $4,033.33 difference worth $709.87 in real tax savings once the Section 199A taxable-income cap she's already up against is accounted for (not a flat 22%, computed from her own stated facts). The catch is a 13-month testing period running through the following December 31 (§223(b)(8)(B)(iii)): drop qualifying coverage before then, and the extra contribution is added back to income plus a 10% additional tax, which the same example shows costs exactly $1,113.20 if she loses coverage the following June.

Nearly every HSA guide — including this site's own — states the eligibility rule as "checked month by month, so if your coverage changes mid-year, your limit is prorated." That's the right general rule and it's true almost all of the time. It's also not the whole statute. Buried in the same subsection that sets the monthly proration rule is a second rule that runs in the opposite direction, and it happens to line up perfectly with how self-employed people actually lose and regain health coverage — mid-year, and usually near a plan-year boundary.

The Rule Everyone States, and the One They Skip

IRC §223(b)(1) caps the HSA deduction at "the sum of the monthly limitations for months during such taxable year that the individual is an eligible individual." §223(b)(2) defines the monthly limitation as 1/12 of the annual figure — for 2026, per Rev. Proc. 2025-19, $4,400 for self-only HDHP coverage or $8,750 for family coverage. Covered by a qualifying HDHP for only three months of the year, and the ordinary rule caps your deduction at 3/12 of the annual number. That's the version of the rule almost every HSA article states, and it's correct as far as it goes.

What it leaves out is §223(b)(8), titled "Increase in limit for individuals becoming eligible individuals after the beginning of the year." Its operative text:

"For purposes of computing the limitation under paragraph (1) for any taxable year, an individual who is an eligible individual during the last month of such taxable year shall be treated— (i) as having been an eligible individual during each of the months in such taxable year, and (ii) as having been enrolled, during each of the months such individual is treated as an eligible individual solely by reason of clause (i), in the same high deductible health plan in which the individual was enrolled for the last month of such taxable year."

For a calendar-year taxpayer, "the last month" is December, and the relevant date is the first day of that month. IRS Notice 2008-52 — issued the year after Congress added this provision — is explicit about the mechanics: "a taxpayer must be an eligible individual on the first day of the last month of his or her taxable year (December 1 for calendar year taxpayers)." Clear that one bar, and the entire year — not just the months you were actually covered — counts for contribution-limit purposes.

What "Eligible Individual" Still Requires

The last-month rule doesn't loosen the definition of who qualifies — it only changes how many months count once you do. §223(c)(1)(A) still requires, as of December 1: (i) coverage under a high deductible health plan, and (ii) no other health coverage that both isn't itself an HDHP and duplicates a benefit the HDHP covers. §223(c)(1)(B) carves out several categories from that second test — coverage for accidents, disability, dental, vision, long-term care, and telehealth don't disqualify you, so having dental insurance on the side is fine.

The HDHP itself has to clear its own dollar thresholds. For 2026, per Rev. Proc. 2025-19, that means an annual deductible of at least $1,700 self-only / $3,400 family, with total annual out-of-pocket costs (excluding premiums) capped at $8,500 self-only / $17,000 family. §223(c)(2)(A) sets the statutory mechanism (base amounts of $1,000/$5,000 from 2003, adjusted for inflation under §223(g) every year since); the current-dollar figures always have to come from that year's IRS revenue procedure, not from the base statutory numbers or from a number seen in a prior year's post.

Only One Direction

The rule is asymmetric by design, and Notice 2008-52 says so directly: §223(b)(8)(A) "may increase, but not decrease" the contribution limit otherwise available. If you had HDHP coverage from January through October and then switched to a non-HDHP plan in November, the last-month rule does nothing for you — you're not an eligible individual on December 1, so you fall back to whatever the ordinary monthly-proration rule computes (10/12 of the annual limit, in that scenario). The rule only ever helps someone who becomes eligible late in the year, never someone who becomes ineligible late in the year.

The Price of Using It: A 13-Month Testing Period

The extra contribution the last-month rule unlocks isn't unconditional. §223(b)(8)(B)(iii) defines a testing period: "the period beginning with the last month of the taxable year referred to in subparagraph (A) and ending on the last day of the 12th month following such month." For a calendar-year taxpayer who used the rule for 2026, that's December 1, 2026 through December 31, 2027 — thirteen months.

If, at any point in that window, you're no longer an eligible individual, §223(b)(8)(B)(i) triggers two separate consequences for the taxable year the lapse occurs in:

"(I) gross income of the individual for the taxable year in which occurs the first month in the testing period for which such individual is not an eligible individual is increased by the aggregate amount of all contributions to the health savings account of the individual which could not have been made but for subparagraph (A), and (II) the tax imposed by this chapter for any taxable year on the individual shall be increased by 10 percent of the amount of such increase."

Two things worth noticing in that text. First, the amount recaptured is specifically the extra contribution the last-month rule made possible — not the entire year's contribution. Nothing in §223(b)(8)(B) conditions the recapture on what happened to the money afterward, so spending it on qualified medical expenses doesn't undo a testing-period failure; the recapture is triggered by the coverage lapse itself, not by whether the funds are still sitting in the account. Second, §223(b)(8)(B)(ii) carves out one exception: the income inclusion and 10% tax don't apply "if the individual ceased to be an eligible individual by reason of the death of the individual or the individual becoming disabled (within the meaning of section 72(m)(7))." A job change, a marriage that puts you on a spouse's non-HDHP plan, or Medicare enrollment all fall outside that exception and trigger the recapture in full.

The QBI Angle Most HSA Content Never Raises

Self-employed retirement contributions and the self-employed health insurance deduction both reduce qualified business income for Section 199A purposes — a fact this site's own solo 401(k) coverage already walks through, and the reason those deductions net only about 80 cents on the dollar once the QBI haircut is applied. It's natural to assume an HSA deduction works the same way. It doesn't, and the reason is specific enough to check directly rather than assume.

Treas. Reg. §1.199A-3(b)(1)(vi) states:

"For purposes of section 199A only, deductions such as the deductible portion of the tax on self-employment income under section 164(f), the self-employed health insurance deduction under section 162(l), and the deduction for contributions to qualified retirement plans under section 404 are considered attributable to a trade or business... on a proportionate basis to the gross income received from the trade or business."

Notice the regulation's own wording — "deductions such as" — is illustrative, not a closed list; it names half of SE tax, the SE health insurance deduction, and qualified retirement plan contributions as examples of deductions the IRS treats as attributable to the trade or business itself. The HSA deduction under §223 isn't one of them, and for a more fundamental reason than simply being unlisted: it's an above-the-line deduction under §62(a)(19) that isn't attributable to any trade or business at all — anyone with qualifying HDHP coverage can claim it, self-employed or not. That means it never enters the QBI computation and never triggers the direct, dollar-for-dollar QBI reduction the three listed deductions do. It's still capable of costing part of its value a different way, though: see the worked example below, where it moves the separate 20%-of-taxable-income cap under §199A(a)(2) even without touching QBI.

Worked Example: One Freelancer, Two Years

Facts. Amara is a single freelance graphic designer. Through November 2026 she's covered under a family member's non-HDHP plan and isn't HSA-eligible. On December 1, 2026, that coverage ends and she enrolls in a qualifying self-only HDHP marketplace plan for herself. Her 2026 Schedule C net profit is $95,000, and she has no other income.

node -e "
// ============================================================
// IRC Sec. 223(b)(8) last-month rule -- two-year worked example
// ============================================================
const HSA_SELF_ONLY_LIMIT_2026 = 4400;       // Rev. Proc. 2025-19 Sec. 2.01(1)
const STD_DEDUCTION_SINGLE_2026 = 16100;     // Rev. Proc. 2025-32 Sec. 3.14
const QBI_THRESHOLD_SINGLE_2026 = 201750;    // Rev. Proc. 2025-32 Sec. 3.26 ('All Other Returns')

function seTax(netProfit) {
  const earnings = netProfit * 0.9235;
  const tax = earnings * 0.153;
  return { earnings, tax, half: tax / 2 };
}

function bracket2026Single(taxableIncome) {
  // Rev. Proc. 2025-32 Sec. 3.01, TABLE 3 -- Unmarried Individuals, 2026
  const b = [
    [0, 12400, 0.10, 0],
    [12400, 50400, 0.12, 1240],
    [50400, 105700, 0.22, 5800],
    [105700, 201775, 0.24, 17966],
    [201775, 256225, 0.32, 41024],
    [256225, 640600, 0.35, 58448],
    [640600, Infinity, 0.37, 192979.25],
  ];
  for (const [lo, hi, rate, base] of b) {
    if (taxableIncome > lo && taxableIncome <= hi) return { rate, tax: base + (taxableIncome - lo) * rate };
  }
}

function taxableIncomeAndTax(netProfit, extraOrdinaryIncome, hsaDeduction) {
  extraOrdinaryIncome = extraOrdinaryIncome || 0;
  hsaDeduction = hsaDeduction || 0;
  const se = seTax(netProfit);
  // QBI itself is unaffected by the HSA deduction: Sec.1.199A-3(b)(1)(vi) does not list it,
  // so it is never attributable to the trade or business for Sec.199A purposes.
  const qbiBase = netProfit - se.half;
  const tentative = qbiBase * 0.20;
  // The 20%-of-taxable-income cap (Sec.199A(a)(2)) is measured on taxable income BEFORE the
  // QBI deduction but AFTER every other above-the-line deduction -- so the HSA deduction (an
  // adjustment to income under Sec.62(a)(19)) and any recaptured income both move this base,
  // even though neither one touches QBI itself.
  const tiBeforeQBI = netProfit - se.half - hsaDeduction - STD_DEDUCTION_SINGLE_2026 + extraOrdinaryIncome;
  const cap = Math.max(0, tiBeforeQBI) * 0.20;
  const qbi = Math.min(tentative, cap);
  const ti = Math.max(0, tiBeforeQBI - qbi);
  const { rate, tax } = bracket2026Single(ti);
  return { se, qbiBase, tentative, tiBeforeQBI, cap, qbi, ti, rate, tax };
}

console.log('=== YEAR 1 -- 2026: the increase ===');
const NET_PROFIT_2026 = 95000;
const monthlyLimit = HSA_SELF_ONLY_LIMIT_2026 / 12;
const ordinaryProratedLimit = monthlyLimit * 1; // eligible only in December under the ordinary rule
const lastMonthRuleLimit = HSA_SELF_ONLY_LIMIT_2026;
const increase = lastMonthRuleLimit - ordinaryProratedLimit;

const y1_ordinary = taxableIncomeAndTax(NET_PROFIT_2026, 0, ordinaryProratedLimit);
const y1_lastMonth = taxableIncomeAndTax(NET_PROFIT_2026, 0, lastMonthRuleLimit);
console.log('Net profit:', NET_PROFIT_2026.toFixed(2));
console.log('SE tax (92.35% x 15.3%):', y1_lastMonth.se.tax.toFixed(2), '| half (above-the-line):', y1_lastMonth.se.half.toFixed(2));
console.log('Under Sec.199A threshold ($' + QBI_THRESHOLD_SINGLE_2026 + ')? ', y1_lastMonth.tiBeforeQBI < QBI_THRESHOLD_SINGLE_2026, '-> SSTB status & W-2 wage/UBIA cap both irrelevant');
console.log();
console.log('Sec.223(b)(2) monthly limitation:', monthlyLimit.toFixed(4));
console.log('Ordinary proration, 1 eligible month (December only):', ordinaryProratedLimit.toFixed(2));
console.log('Sec.223(b)(8)(A) last-month-rule limit (full year):', lastMonthRuleLimit.toFixed(2));
console.log('Additional HSA deduction the last-month rule unlocks:', increase.toFixed(2));
console.log();
console.log('-- With only the ORDINARY prorated $' + ordinaryProratedLimit.toFixed(2) + ' HSA deduction --');
console.log('Tentative QBI ded (20% of QBI base):', y1_ordinary.tentative.toFixed(2));
console.log('20%-of-taxable-income cap (Sec.199A(a)(2)):', y1_ordinary.cap.toFixed(2), '<- BINDS');
console.log('QBI deduction allowed:', y1_ordinary.qbi.toFixed(2));
console.log('Taxable income:', y1_ordinary.ti.toFixed(2), '| tax:', y1_ordinary.tax.toFixed(2), '| marginal bracket:', (y1_ordinary.rate * 100) + '%');
console.log();
console.log('-- With the FULL $' + lastMonthRuleLimit.toFixed(2) + ' last-month-rule HSA deduction --');
console.log('Tentative QBI ded (20% of QBI base, unchanged -- HSA never touches QBI):', y1_lastMonth.tentative.toFixed(2));
console.log('20%-of-taxable-income cap (Sec.199A(a)(2)):', y1_lastMonth.cap.toFixed(2), '<- BINDS, now lower because the HSA deduction shrank the cap base too');
console.log('QBI deduction allowed:', y1_lastMonth.qbi.toFixed(2));
console.log('Taxable income:', y1_lastMonth.ti.toFixed(2), '| tax:', y1_lastMonth.tax.toFixed(2), '| marginal bracket:', (y1_lastMonth.rate * 100) + '%');
console.log();
const realTaxSavings = y1_ordinary.tax - y1_lastMonth.tax;
console.log('REAL tax savings from the extra', increase.toFixed(2), 'of HSA deduction (cap-aware, not a flat 22%):', realTaxSavings.toFixed(2));
console.log();

console.log('=== YEAR 2 -- 2027: the 13-month testing period (Dec 1, 2026 - Dec 31, 2027) ===');
console.log('SCENARIO A: HDHP-only coverage continues through Dec 31, 2027 -> testing period satisfied, no recapture, the', increase.toFixed(2), 'deduction is permanent.');
console.log();
console.log('SCENARIO B: in June 2027, Amara enrolls in a new spouse\\'s employer non-HDHP family plan');
const NET_PROFIT_2027 = 105000; // illustrative -- 2027 brackets/std deduction not yet published as of this post
const y2_without = taxableIncomeAndTax(NET_PROFIT_2027, 0, 0);
const y2_with = taxableIncomeAndTax(NET_PROFIT_2027, increase, 0);
console.log('2027 net profit (illustrative; 2026 rate schedule used as the best available proxy):', NET_PROFIT_2027.toFixed(2));
console.log('Taxable income / tax WITHOUT recapture:', y2_without.ti.toFixed(2), '/', y2_without.tax.toFixed(2), '(' + (y2_without.rate*100) + '%)');
console.log('Taxable income / tax WITH', increase.toFixed(2), 'of recapture income added (also raises the Sec.199A cap base):', y2_with.ti.toFixed(2), '/', y2_with.tax.toFixed(2), '(' + (y2_with.rate*100) + '%)');
const incrementalTax = y2_with.tax - y2_without.tax;
console.log('Incremental ordinary income tax caused by the recapture:', incrementalTax.toFixed(2));
const additionalTax10pct = increase * 0.10;
console.log('Sec.223(b)(8)(B)(i)(II) additional 10% tax on the recaptured amount:', additionalTax10pct.toFixed(2));
console.log('TOTAL cost of failing the testing period:', (incrementalTax + additionalTax10pct).toFixed(2));
"

Output:

=== YEAR 1 -- 2026: the increase ===
Net profit: 95000.00
SE tax (92.35% x 15.3%): 13423.07 | half (above-the-line): 6711.54
Under Sec.199A threshold ($201750)?  true -> SSTB status & W-2 wage/UBIA cap both irrelevant

Sec.223(b)(2) monthly limitation: 366.6667
Ordinary proration, 1 eligible month (December only): 366.67
Sec.223(b)(8)(A) last-month-rule limit (full year): 4400.00
Additional HSA deduction the last-month rule unlocks: 4033.33

-- With only the ORDINARY prorated $366.67 HSA deduction --
Tentative QBI ded (20% of QBI base): 17657.69
20%-of-taxable-income cap (Sec.199A(a)(2)): 14364.36 <- BINDS
QBI deduction allowed: 14364.36
Taxable income: 57457.44 | tax: 7352.64 | marginal bracket: 22%

-- With the FULL $4400.00 last-month-rule HSA deduction --
Tentative QBI ded (20% of QBI base, unchanged -- HSA never touches QBI): 17657.69
20%-of-taxable-income cap (Sec.199A(a)(2)): 13557.69 <- BINDS, now lower because the HSA deduction shrank the cap base too
QBI deduction allowed: 13557.69
Taxable income: 54230.77 | tax: 6642.77 | marginal bracket: 22%

REAL tax savings from the extra 4033.33 of HSA deduction (cap-aware, not a flat 22%): 709.87

=== YEAR 2 -- 2027: the 13-month testing period (Dec 1, 2026 - Dec 31, 2027) ===
SCENARIO A: HDHP-only coverage continues through Dec 31, 2027 -> testing period satisfied, no recapture, the 4033.33 deduction is permanent.

SCENARIO B: in June 2027, Amara enrolls in a new spouse's employer non-HDHP family plan
2027 net profit (illustrative; 2026 rate schedule used as the best available proxy): 105000.00
Taxable income / tax WITHOUT recapture: 65185.59 / 9052.83 (22%)
Taxable income / tax WITH 4033.33 of recapture income added (also raises the Sec.199A cap base): 68412.26 / 9762.70 (22%)
Incremental ordinary income tax caused by the recapture: 709.87
Sec.223(b)(8)(B)(i)(II) additional 10% tax on the recaptured amount: 403.33
TOTAL cost of failing the testing period: 1113.20

Five things to notice, in order:

1. The Section 199A taxable-income cap binds here — and the HSA deduction itself moves where it binds, even though it never touches QBI. QBI is unaffected by the HSA deduction (Amara's tentative 20%-of-QBI figure is $17,657.69 either way), but the cap it's measured against is 20% of taxable income before the QBI deduction — and taxable income before QBI falls by the full HSA deduction, since it's an above-the-line adjustment under §62(a)(19). With only the ordinary $366.67 prorated deduction the cap is $14,364.36; claim the full $4,400.00 last-month-rule deduction instead and the cap drops to $13,557.69, a $806.67 smaller QBI deduction that partly offsets the larger HSA write-off. This is the exact trap qbi-deduction-freelancers.mdx describes — "in a low-income year, this cap can bind even when QBI itself looks large" — applied one layer deeper than usual: here it's not the QBI deduction being clawed back, it's a different above-the-line deduction shrinking the base that caps it.

2. The last-month rule is worth $4,033.33 of additional HSA deduction, not the full $4,400.00. The comparison that matters is against what the ordinary monthly-proration rule would already allow (one eligible month, $366.67) — not against zero. Overstating the benefit as the full annual limit is the most common way this rule gets misdescribed.

3. The HSA deduction never reduces QBI — but it still isn't worth a flat 22% once the taxable-income cap is already binding. Because the HSA deduction isn't one of the items Treas. Reg. §1.199A-3(b)(1)(vi) treats as attributable to the trade or business, it never shrinks the tentative QBI deduction the way a solo 401(k) or SEP contribution would (those are on that list and reduce QBI dollar-for-dollar). But when the 20%-of-taxable-income cap is already the binding constraint — as it is throughout this example — every dollar that lowers taxable income also lowers that cap by 20 cents, HSA deduction included. The real tax savings on the extra $4,033.33 of HSA deduction work out to $709.87, not the $887.33 a flat 22% would suggest. A solo 401(k) contribution would do worse still, losing value through both channels at once: it reduces QBI directly and lowers the taxable-income cap, since it's also an above-the-line deduction.

4. Failing the testing period costs the incremental tax on the recaptured amount, plus a flat 10% on top. Both 2027 scenarios land in the same 22% bracket, and the recaptured $4,033.33 raises taxable income and the Section 199A cap base together — the same cap-aware mechanic from year 1, working in reverse. The incremental ordinary income tax from the recapture is $709.87, matching year 1's real savings exactly (as it should: a full recapture is designed to put the taxpayer back where they'd have been without the rule). On top of that, §223(b)(8)(B)(i)(II) adds a flat $403.33 — 10% of the recaptured $4,033.33, regardless of bracket. Total cost of the lapse: $1,113.20.

5. 2027 tax brackets weren't published as of this post's date, so the recapture-year figures use the known 2026 rate schedule as an explicit stand-in. The mechanism — income inclusion (which also moves the Section 199A cap) plus a flat 10% additional tax on the recaptured amount — doesn't depend on which year's brackets apply; only the exact dollar total of the incremental tax component would shift slightly once 2027's inflation-adjusted brackets and standard deduction are published.

What This Doesn't Change

• The annual contribution ceiling is still capped by coverage tier. The last-month rule can get you to the full $4,400 self-only or $8,750 family limit for 2026 — it can't get you past it, and it can't combine a self-only HDHP month with a family HDHP month to claim more than either tier allows on its own.
• The $1,000 catch-up for age 55+ follows the same last-month logic, since §223(b)(3)'s catch-up amount is added to the same monthly-limitation base that §223(b)(8) is computed from — but it's still capped at $1,000 regardless of coverage tier.
• This says nothing about the separate self-employed health insurance deduction under §162(l). That deduction covers your HDHP premiums; the HSA deduction under §223 covers what you contribute to the account itself. They run on separate mechanics and don't offset each other.
• A qualifying HDHP still has to meet that year's deductible and out-of-pocket thresholds. A plan that was HDHP-qualified two years ago isn't automatically qualified this year if its cost-sharing terms didn't keep pace with the year's inflation-adjusted minimums.

Common Mistakes to Avoid

1. Assuming the contribution limit is always prorated by month. That's the right default, but it's wrong for anyone who's an eligible individual on December 1 — check that date specifically before assuming proration is the only option.
2. Contributing the full annual limit without checking December 1 status. The rule keys off that exact date, not "sometime in the last month" or "as of year-end" loosely construed.
3. Treating the extra amount as the full annual limit rather than the limit minus what ordinary proration would already allow. The benefit is the difference between the two, and confusing them overstates the deduction's true value.
4. Losing track of the 13-month testing period. It runs a full year past December 31 of the contribution year, not just through the end of that same year — a coverage change the following summer is still well inside the window.
5. Assuming spending the HSA funds undoes a testing-period failure. It doesn't — §223(b)(8)(B) triggers the recapture on the coverage lapse itself, with no condition tied to whether the money is still in the account or has already been spent on qualified medical expenses.
6. Assuming the HSA deduction is a complete escape from Section 199A. It never reduces QBI directly the way retirement or health-insurance deductions do — but it can still cost you part of its value through the separate 20%-of-taxable-income cap once that cap is the binding one, exactly as the worked example above shows. "No QBI haircut" and "no Section 199A effect at all" are not the same claim.

How CentSense Helps

CentSense doesn't track your HDHP enrollment date or run the testing-period countdown — that's a coverage record your insurer and preparer maintain — but it solves the side of this that's actually a recordkeeping problem:

• Every dollar of business income is scanned and dated as it happens, so the net-profit figure your HSA and QBI calculations both depend on is accurate and available well before your preparer needs it, not reconstructed in April
• A clean, categorized expense trail makes it straightforward to see your actual Schedule C profit at any point in the year — useful for checking, before December 1 arrives, whether that year's income and health-coverage timing line up the way a last-month-rule strategy assumes
• Year-round visibility into your business's numbers means a mid-year HDHP switch doesn't have to wait until tax season to get modeled against your real income

For the mechanics this post assumes elsewhere, see our HSA for Freelancers guide for baseline eligibility and contribution rules, HSA vs. FSA for the Self-Employed for why FSAs aren't available to most freelancers in the first place, QBI Deduction for the taxable-income cap this example ran into, Self-Employment Tax Explained for the 15.3%/92.35% mechanics, and Self-Employed Health Insurance Deduction for the separate premium deduction under §162(l).

Authoritative References

• 26 U.S.C. §223 — Health savings accounts, especially subsections (b)(1)-(2) monthly limitation, (b)(8) the last-month/full-contribution rule, and (c)(1)-(2) eligibility and HDHP definitions (Cornell LII, current text)
• 26 U.S.C. §62 — Adjusted gross income defined, especially subsection (a)(19) making the Section 223 deduction above-the-line (Cornell LII)
• IRS Notice 2008-52 — Guidance on the full contribution rule under §223(b)(8) and the testing period, including worked examples (IRS)
• Rev. Proc. 2025-19 — 2026 inflation-adjusted HSA contribution limits and HDHP minimum deductible / maximum out-of-pocket amounts (IRS)
• Rev. Proc. 2025-32 — 2026 inflation-adjusted standard deduction, tax rate tables, and Section 199A threshold and phase-in range amounts (IRS)
• 26 CFR §1.199A-3 — Qualified business income, deductions, and losses, especially subsection (b)(1)(vi) naming the deductions treated as attributable to a trade or business for Section 199A purposes (Cornell LII)
• About Form 8889, Health Savings Accounts (HSAs) (IRS)

Whether you clear the last-month rule comes down to one date — December 1 — and whether you can hold that same coverage through the following December 31. Start a free CentSense account to keep your business income tracked and current all year, so the net-profit number your HSA, QBI, and marginal-rate decisions all depend on is never a April surprise. Free tier includes 10 AI scans a month, no credit card required — or upgrade to the Solo plan for $5/month for unlimited scans, mileage tracking, and a CPA-ready CSV export. Start free →

This guide is general education for U.S. self-employed freelancers filing in 2026. It is not personalized tax advice. Whether your specific health coverage qualifies as an HDHP, whether you were an eligible individual on December 1 of a given year, and how a testing-period lapse would be computed and reported on your own return are fact-specific determinations. Consult a CPA or EA before relying on any figure in this post for your own return.