HSA calculator
What a health savings account is worth: the income tax saved, the payroll tax no other account avoids, and what the balance becomes if you leave it invested.
Covers 2026 plan year · rates as at 2026-01-01
Tax saved this year
Estimate$2,769.00
24% income tax plus 7.65% payroll tax on 8,750
- Your contribution limit
- $8,750.00
- Payroll tax saved
- $669.00
- Balance after 20 years
- $358,711
| Contribution | $8,750.00 |
|---|---|
| Income tax saved at 24% | $2,100.00 |
| Payroll tax saved at 7.65% | $669.00 |
| Total tax saved | $2,769.00 |
- The payroll tax saving only applies to contributions made through an employer plan, not to direct deposits claimed on your return.
- Requires enrolment in a qualifying high-deductible health plan for the months contributed.
A family contribution of $8,750 at a 24% marginal rate saves $2,100 of income tax plus $669 of payroll tax — a 31.65% immediate return no other account offers.
How this is calculated
How this is calculated
The only triple-tax-free account
Contributions are deductible, growth is untaxed, and withdrawals for qualified medical costs are tax free. Made through payroll it also escapes the 7.65% FICA, which a 401(k) never does — worth $669 on an $8,750 family contribution.
saving = contribution × (marginal rate + 7.65%)Contributing is not investing
Most HSA providers park the balance in cash by default, often with a $1,000 to $2,000 threshold before investing is allowed. Contributing $8,750 a year for 20 years at 7% instead of 0% is the difference between roughly $175,000 and $359,000.
After 65 it behaves like a traditional account
From age 65 non-medical withdrawals attract income tax but no penalty, so an unused balance is simply a retirement account with better treatment for medical costs. The 20% penalty applies only before 65.
Worked example: Family cover, $8,750 contributed at a 24% marginal rate
| Coverage | Family |
|---|---|
| Contribution | $8,750 |
| Marginal rate | 24% |
| Years | 20 |
| Income tax saved | $2,100 |
|---|---|
| Payroll tax saved | $669 |
| Net cost | $5,981 |
The same $8,750 into a 401(k) saves the $2,100 but not the $669, because retirement deferrals never escape FICA. Over 20 years that difference alone is worth more than $27,000 invested.
What this assumes
- Qualifying high-deductible cover for the full year.
- Contributions made through payroll, so payroll tax is avoided.
- The balance is invested rather than held in cash.
- No account fees.
Where this commonly goes wrong
- Direct contributions claimed on your return get the income tax deduction but not the 7.65% payroll saving — always contribute through payroll if the option exists.
- Enrolling in Medicare ends HSA eligibility, and Part A can backdate six months, creating excess contributions that attract a penalty.
- Balances left in the default cash sweep earn near nothing while medical inflation runs ahead of general inflation.
Questions
How much can I contribute to an HSA?
For 2026 the limit is $4,400 for self-only cover and $8,750 for family cover, plus $1,000 from age 55. Employer contributions count towards those figures rather than sitting outside them.
Is an HSA better than a 401(k)?
For the first dollars beyond your employer match, usually yes. An HSA contributed through payroll avoids income tax and the 7.65% FICA — $669 more on $8,750 than a 401(k) saves — and medical withdrawals are never taxed.
Do I lose my HSA balance at the end of the year?
No. Unlike a flexible spending arrangement, an HSA rolls over indefinitely and stays yours if you change employers or health plans. Only the ability to keep contributing depends on qualifying cover.
Should I invest my HSA or spend it?
If you can pay current medical costs from cash flow, invest it and keep the receipts. $8,750 a year for 20 years at 7% is roughly $359,000 against about $175,000 left in the default cash sweep.
What happens to my HSA at 65?
Medical withdrawals stay tax free, and non-medical withdrawals become taxable income without the 20% penalty that applies earlier. At that point it behaves like a traditional retirement account with a better medical option.
Can I still contribute if I go on Medicare?
No. Medicare enrolment ends eligibility, and Part A enrolment can backdate up to six months. Contributions made in that backdated window become excess contributions and attract a penalty unless withdrawn.
Related tools
Sources
Estimate only, based on published IRS figures for 2026 plan year. Not tax or legal advice. Confirm your position with the IRS, a CPA, or an enrolled agent.
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