HSA Earnings Taxation in California

[DM007]

I use TurboTax Home and Business. Under the state section Investments/Health Savings Account Earnings, if you click on "Learn More", you get the following: "If your HSA earned income from interest, dividends or capital gains, that income is not taxed by the federal government. However, California considers it taxable income."

This cannot be true. The CA Franchise Tax Board, clearly states that Earnings on amounts in HSAs are not taxable.  Simply Google "are HSA earnings taxable in California 2022?" https://www.ftb.ca.gov/tax-pros/law/legislation/2021-2022/AB727-010322.pdf (Page 3, first paragraph)

Please let me know or confirm that this is an error in TurboTax.

Thanks,

[Bsch4477 · Accepted solution]

You are referencing a bill which has not been passed. Current law is that HSA earnings are taxable.