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Total Tax Savings
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Income Tax Saved
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FICA Tax Saved
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Calculate the total tax savings from your HSA contributions, including income and payroll tax.
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Income Tax Saved
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FICA Tax Saved
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Multiply your contribution by your marginal income tax rate to find income tax savings. If contributing via payroll, add 7.65% FICA savings, since payroll HSA contributions also avoid Social Security and Medicare tax.
Total Savings = Contribution × (Income Tax Rate + FICA Rate if via payroll)
A Health Savings Account offers three distinct tax benefits that no other common account type combines: contributions are deductible (or pre-tax through payroll), the balance grows tax-free while invested, and withdrawals for qualified medical expenses are also tax-free. Traditional retirement accounts give you tax-free contributions or tax-free withdrawals, but not both, plus tax-free growth, making the HSA structurally unique.
Contributing to an HSA through payroll deduction (rather than after-tax and claiming a deduction later) also avoids FICA payroll taxes, the 6.2% Social Security tax and 1.45% Medicare tax that apply to regular wages. This extra layer of savings, worth 7.65% on top of income tax savings, only applies to payroll contributions, not direct contributions you make yourself and deduct on your tax return.
Only individuals enrolled in a qualifying High-Deductible Health Plan (HDHP) can contribute to an HSA. Being enrolled in Medicare, having other disqualifying coverage (like a general-purpose FSA), or being claimed as a dependent on someone else's tax return can all disqualify you from contributing, even if you have an existing HSA balance from a prior year.
Because unused HSA funds roll over indefinitely with no expiration, some people treat their HSA as a supplemental retirement account, investing the balance and paying medical expenses out of pocket when possible, letting the account grow tax-free for decades. After age 65, HSA funds can be withdrawn for any purpose without penalty (though non-medical withdrawals are taxed as ordinary income, similar to a traditional IRA).
HSA contributions are tax-deductible (or pre-tax if through payroll), grow tax-free while invested, and can be withdrawn tax-free for qualified medical expenses at any age, making it the only account type with this full triple tax advantage.
You must be enrolled in a qualifying High-Deductible Health Plan (HDHP), have no other disqualifying health coverage, and not be enrolled in Medicare to contribute to an HSA. Contribution limits are set annually by the IRS and differ for individual and family coverage.
Unlike a Flexible Spending Account (FSA), HSA funds roll over indefinitely with no 'use it or lose it' rule, and the account stays with you even if you change employers or health plans, making it usable as a long-term savings vehicle.
Estimate self-employment tax with the Self-Employment Tax Calculator, or check your overall tax bracket with the Tax Bracket Calculator.
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