HSA vs FSA calculator

How the formula works

An HSA and an FSA are both funded with pre-tax dollars taken straight out of your paycheck. Because they come out before withholding, each dollar you contribute escapes federal income tax, state income tax, and the 7.65% FICA payroll tax — the last part only when the money is payroll-deducted, which is the case for an FSA and for an HSA funded through your employer. So the tax saved in the year you contribute is the same for both accounts:

where \(C\) is the annual contribution, \(t_{\text{fed}}\) your marginal federal rate, \(t_{\text{state}}\) your state rate, and \(t_{\text{FICA}} = 7.65\%\). That headline number is where the two accounts agree — and where the resemblance ends.

The difference is what happens to money you contribute but do not spend on medical costs. An FSA is use-it-or-lose-it: past a small carryover, any unspent balance is forfeited at the plan year's end. An HSA rolls its balance over forever and lets you invest it, so the unspent portion \(U\) keeps compounding:

where \(r\) is the expected annual return and \(N\) the number of years the money stays invested. This is the HSA's famous triple tax advantage: the contribution goes in untaxed, it grows tax-free, and it comes out tax-free when spent on qualified medical care — three separate tax breaks stacked on the same dollar. The catch is the entry requirement: you can only open an HSA if you are covered by a qualifying high-deductible health plan (HDHP). An FSA has no such requirement and can pair with almost any plan.

What each input means

Annual contribution — \(C\)

What you put in for the year through payroll. For 2026 the HSA limit is $4,400 for self-only coverage and $8,750 for family; the health FSA limit is $3,400. This tool does not cap your entry at those figures — enter what you plan to contribute.

Your marginal tax rate

The federal rate on your top dollar of income — 22% for a wide band of single filers in 2026. Because the contribution comes off the top of your income, it is this marginal rate, not your lower effective rate, that measures the saving.

State income tax rate

One flat percentage for your state income tax. Almost every state that taxes income also lets HSA and FSA payroll deductions through untaxed; nine states charge no income tax at all — enter 0. (A few states tax HSA contributions differently; this is an estimate.)

Medical spending you'll use

What you honestly expect to spend from the account this year on real qualified medical costs. Anything you contribute above this is the unspent amount — the balance that an FSA puts at risk and an HSA lets you keep and grow.

Years to invest unspent HSA funds

How long the unspent HSA balance stays invested before you spend it. An HSA has no deadline: unspent money can ride for decades, which is what makes the long-run figure so large.

Expected annual return — \(r\)

The assumed yearly return on invested HSA funds. A long-run figure like 5–7% is a common starting point for a diversified portfolio; nothing guarantees it, and the balance is held constant here for the projection.

A worked example

The worksheet's defaults: $3,000 contributed for the year, a 22% marginal federal rate, 5% state tax, and $1,500 of medical spending you will actually use — with any HSA leftover invested for 20 years at 7%.

• Combined rate: 22% federal + 5% state + 7.65% FICA = 34.65%.
• This year's tax saving, the same for either account: $3,000 × 34.65% = $1,039.50.
• Unspent this year: $3,000 − $1,500 spent = $1,500.
• In an FSA, that leftover is forfeited past the $680 carryover: $1,500 − $680 = $820 lost. FSA net benefit = $1,039.50 tax saving − $820 forfeited = $220.
• In an HSA, nothing is forfeited — the full $1,039.50 tax saving stands, and the $1,500 rolls over.
• Invested for 20 years at 7%, that $1,500 grows by a factor of 3.870 to $5,805 — money the FSA saver simply lost.

Assumptions and limits

• 2026 figures. The HSA contribution limit is $4,400 self-only / $8,750 family, the health FSA limit is $3,400, and the FSA carryover is about $680 (some plans instead offer a grace period, and some offer neither). These change yearly, and the tool does not cap your input at them.
• An HSA requires enrollment in a qualifying high-deductible health plan (HDHP). An FSA does not — it pairs with most employer plans, but you generally cannot have a general-purpose FSA and an HSA at the same time.
• The tool assumes payroll deduction, which is what lets both accounts avoid the 7.65% FICA tax. Contributing to an HSA on your own after tax still earns the income-tax deduction, but not the FICA saving.
• The investment return is treated as a constant. Real returns swing; the long-run HSA figure is a projection of an assumption, not a promise.
• An HSA is not free money if you never have real medical costs to spend it on — though after age 65 it works like a traditional IRA, so unspent funds are never truly stranded.
• This is arithmetic, not advice. It shows what the inputs imply under one year's rules; it cannot see your whole tax or health situation.

Questions people ask

What is the core difference between an HSA and an FSA?

Both are pre-tax health accounts that cut your income and payroll tax the same way in the year you contribute. The difference is ownership and permanence. An FSA belongs to your employer's plan and is use-it-or-lose-it: unspent money is forfeited at year end past a small carryover. An HSA is yours, rolls over forever, can be invested, and is triple-tax-advantaged. The trade-off is that an HSA requires a high-deductible health plan, while an FSA pairs with almost any plan.

Do I really lose unspent FSA money at the end of the year?

Mostly, yes. A health FSA is use-it-or-lose-it. Your plan may offer one of two softeners: a carryover of up to about $680 into the next year, or a grace period of up to 2.5 extra months to spend the balance — but a plan cannot offer both, and some offer neither. On the default scenario, $3,000 contributed against $1,500 of real spending leaves $1,500 unspent; past the carryover, $820 of that is simply gone. That is why you should fund an FSA only up to what you are confident you will spend.

What is the HSA triple tax advantage?

Three separate tax breaks stack on the same dollar. First, the contribution goes in untaxed — it dodges federal and state income tax, and FICA too when payroll-deducted. Second, it grows tax-free: no tax on interest, dividends or gains inside the account. Third, it comes out tax-free when spent on qualified medical expenses. No other account — not a 401(k), not a Roth — gives you all three at once, which is why unspent HSA money is worth far more over time than an FSA's forfeited leftover.

Do I need a high-deductible health plan to use an HSA?

Yes. You can only contribute to an HSA while you are covered by a qualifying high-deductible health plan (HDHP) and have no disqualifying other coverage. An FSA has no such requirement and works with most employer plans. If you are not on an HDHP, the HSA column of this calculator is hypothetical for you — the FSA figures are the ones that apply.

What happens to my HSA at age 65?

It gets more flexible. Before 65, a non-medical withdrawal is taxed as income and hit with a 20% penalty. At 65 the penalty disappears: you can withdraw for anything and simply pay ordinary income tax on it, exactly like a traditional IRA. Spending on qualified medical costs stays tax-free at any age. So a well-funded HSA is never wasted — at worst it becomes a retirement account, and at best it pays medical bills tax-free for life.