FSA Calculator

Quick Answer

Last updated: 10 November 2026 ·How we calculate this: 2026 IRS health FSA limits and pre-tax payroll rules

How This FSA Calculator Works

A health flexible spending account lets you set aside part of your pay before taxes to cover medical, dental and vision costs such as deductibles, copays, prescriptions and glasses. Enter how much you plan to contribute, how much you expect to spend, your tax rates and your plan’s rule for unused money. The calculator shows the tax you save, how much you could lose at year end, and the net benefit.

How to Use the FSA Calculator

1. Enter how much you plan to contribute for the year.
2. Enter the medical, dental and vision costs you expect.
3. Choose your federal tax bracket and enter your state tax rate.
4. Choose your payroll tax and your plan’s carryover rule.
5. Press Calculate and compare the tax saved with the money at risk.

FSA Savings Formula

• Combined tax rate: federal bracket + state rate + payroll tax rate (7.65%, or 1.45% above the Social Security wage base)
• Tax saved: contribution × combined tax rate
• Left over: contribution − eligible expenses (if more than zero)
• Lost: left over − carryover allowed (up to $680 for 2026)
• Net benefit: tax saved − money lost

Key Terms

• Health FSA: an employer account funded with pre-tax pay for medical costs.
• Election: the amount you choose to contribute for the plan year.
• Carryover: unused money (up to $680 for 2026) that rolls into the next plan year.
• Grace period: up to 2.5 extra months to spend last year’s money, offered instead of a carryover.
• FICA: Social Security (6.2%) and Medicare (1.45%) payroll taxes.

Worked Example

You are in the 12% bracket, pay no state income tax, and expect $4,000 of medical bills, with a use-it-or-lose-it plan.

• Contribute the 2026 limit of $3,400; all of it will be spent
• Combined rate = 12% + 0% + 7.65% = 19.65%
• Tax saved = $3,400 × 0.1965 = $668.10
• Nothing is lost, so the net benefit is $668.10

Real-Life Examples

• Open enrollment: pick an election that captures the tax saving without overfunding.
• Carryover plans: $3,000 in with $2,800 spent saves $1,039.50 and carries $200 to next year.
• Use-it-or-lose-it plans: the same numbers leave a net benefit of $839.50 after losing $200.
• Big known costs: braces, glasses or a planned surgery are easy to fund through an FSA.

FSA vs HSA

• FSA: any employer health plan, $3,400 limit for 2026, mostly use it or lose it, full amount available on day one.
• HSA: needs a high-deductible plan, higher limits, money never expires and can be invested.
• Both save income and payroll tax on contributions made through payroll.

Tax Saved on a $3,400 FSA

Includes 7.65% Social Security and Medicare tax.

Rules That Affect Your FSA

The IRS sets a yearly limit on how much each employee can put in a health FSA through salary reductions: $3,400 for 2026. Employers may also contribute. Unspent money is normally forfeited, but a plan can choose one of two relief rules: a carryover of up to $680 into 2027, or a grace period of up to two and a half months to spend the money. A plan cannot offer both.

Health FSA money is available on day one: you can spend the full year’s election in January even though it is taken from your pay over the year. If you leave the job, unused money usually stays with the plan. FSAs can pay for many items without a prescription, including over-the-counter medicines and menstrual products, but not for health insurance premiums.

If you have a high-deductible health plan, a health savings account (HSA) may be better because unused HSA money is never lost. You generally cannot have both a regular health FSA and an HSA, but a limited-purpose FSA for dental and vision can go with an HSA.

Common Mistakes to Avoid

• Overfunding. Money above your expenses and carryover is lost.
• Forgetting payroll tax. The 7.65% FICA saving makes the FSA worth more than income tax alone suggests.
• Missing the deadline. Submit claims before the plan’s run-out date.
• Ignoring an HSA. With a high-deductible plan, an HSA keeps unused money.
• Assuming everyone has a carryover. Many plans are strictly use it or lose it.

Frequently Asked Questions

References & Sources