Yes, your employer prints state wages in box 16 on your W-2, and the employer may or may not add back the HSA deduction to state wages.
But it turns out that this box 16 number - which is listed in form 540 on line 12 - is actually not used anywhere on the state return.
Instead, CA starts the real calculations with the federal amount (which has the HSA deductions removed) and so always adds the contributions back to state income. You can see this for yourself by following the form.
So despite what people (including me) have said in the past, don't worry about whether the state wages on the W-2 have the HSA contributions added back or not - it doesn't matter.
@yemser
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