No, for the contributions themselves. This is because in New Jersey, the HSA is just considered an investment account, whose interest, dividends, and capital gains are taxed each year.
However, amounts distributed from the HSA, which are not deductible on the federal return when for qualified medical expenses, are considered deductible in New Jersey. And in the same vein, a distribution from the HSA that is not for qualified medical expenses which is added to federal Other Income and penalized an additional 20%, is neither added to New Jersey income nor subject to a 20% penalty, because this distribution is just the withdrawal of dollars from an investment account.
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