U.S. · Tax forms
Form 8889 line 17b, additional 20% tax.
When the 20% applies, the three exceptions, and what to enter on 17a and 17b.
Line 17b is 20% (0.20) of the taxable HSA distributions on line 16 that do not meet an exception. The 20% additional tax does not apply to distributions made after the account beneficiary dies, becomes disabled or turns age 65. If an exception applies to any of the distributions, check the box on line 17a.
Look up a Form 8889 situation
Result
Lines 16 to 17b (2025 form and instructions)
| Line | Meaning | What the IRS says |
|---|---|---|
| 16 | Taxable HSA distributions | Line 14c minus line 15, never below zero. Also included on Schedule 1 (Form 1040), Part I, line 8f |
| 17a | Exception box | Check if any distribution included on line 16 meets an exception to the additional 20% tax |
| 17b | Additional 20% tax | Enter 20% (0.20) of the distributions on line 16 that are subject to the tax. Also included in the total on Schedule 2 (Form 1040), Part II, line 17c |
| Exception: death | Distributions made after the account beneficiary dies | No additional 20% tax |
| Exception: disability | Distributions made after the account beneficiary becomes disabled | No additional 20% tax |
| Exception: age 65 | Distributions made after the account beneficiary turns age 65 | No additional 20% tax |
| Mistaken distributions | Very limited and unusual circumstances | The instructions point to Notice 2004-50, Q/A 37 and 76 |
Two taxes, not one
Taxable HSA withdrawals are first added to income through line 16 and Schedule 1. Line 17b is an extra tax on top, reported on Schedule 2. Distributions used for qualified medical expenses never reach line 16, so they never reach 17b. The additional tax lands only on the leftover that is both taxable and not covered by an exception.
Mixed years
The instructions say to enter on line 17b only 20% of any amount included on line 16 that does not meet any of the exceptions. In a year when you turn 65 or become disabled partway through, only withdrawals made after that point are exempt, so the amount subject to the tax can be part of line 16 rather than all or none.
Last-month rule is separate
Failing to remain an eligible individual during the testing period after using the last-month rule, or after a qualified HSA funding distribution, produces income and a different 10% additional tax in Part III. That is not line 17b.
Worked example
Noor, 52, shows $800 on line 16 and no exception applies. Line 17b is 0.20 × $800 = $160. Her colleague Ben turned 65 in March: of his $800 on line 16, $300 was withdrawn after he turned 65. He checks the box on 17a and enters 0.20 × ($800 − $300) = $100 on line 17b. Names and figures are made up.
More Form 8889 line pages
Other pages in this set: Form 8889 Line 3, Form 8889 Line 6, Form 8889 Line 9, Form 8889 Line 13, Form 8889 Line 14a, Form 8889 Line 15.
Sources
- Instructions for Form 8889 (2025): the line-by-line instructions on this page. Page last reviewed or updated April 30, 2026. Read November 2, 2026.
- Form 8889 (2025): the printed line wording and arithmetic on the form. Read November 2, 2026.
Tax year 2025 edition. Line numbers and dollar limits are those printed in the 2025 instructions and form and change by year. Names in worked examples are made up.
Frequently asked questions
What is the additional 20% tax on an HSA?
An extra tax on taxable HSA distributions included on line 16 that do not meet an exception.
What are the exceptions?
Distributions made after the account beneficiary dies, becomes disabled or turns age 65.
What do I enter on line 17b?
20% (0.20) of the amount on line 16 that does not meet any exception. The total also flows to Schedule 2 (Form 1040), Part II, line 17c.
What does the line 17a box mean?
Check it if any of the distributions included on line 16 meet an exception to the additional 20% tax.
Is there ever relief for a mistaken withdrawal?
The instructions say there may be very limited and unusual circumstances for returning mistaken distributions, and cite Notice 2004-50, Q/A 37 and 76.
Not tax advice
This page summarizes IRS instructions, mostly written for the people who prepare the form, and is not tax, legal or financial advice. A CPA or an enrolled agent can confirm what a line means for your return. Everything runs in your browser; nothing you enter is sent anywhere.