The amount you deposit (contribute) to the HSA is subject to self-employment tax but is excluded from income tax. Withdrawals from the account are non-taxable if you use them for qualifying medical expenses. Any income earned by the account (interest or dividends) is tax free.
The balance of the account has nothing to do with it. The idea of an HSA is that you can make tax-free contributions over time that accumulate and can be used to pay big expenses later on.
