HSA vs FSA tax savings calculator

HSA vs FSA — same upfront savings, wildly different long-game

Both HSA and FSA reduce your taxable income by the contribution amount. The upfront tax savings are identical. The difference is what happens to that money over time.

FSA — use it or lose it

• Annual limit (2025): $3,300
• Carryover: up to $660 to next year (employer-dependent), or 2.5-month grace period — that's it
• Investment: not allowed
• Portability: not portable when you change jobs

FSA is a year-by-year tax-arbitrage on expected medical expenses. Forecast your medical spending, contribute that amount, save the marginal tax rate. Don't over-contribute.

HSA — the triple-tax-free retirement vehicle

HSAs are unique in the US tax code:

1. Pre-tax contribution (saves federal + state + FICA if payroll-deducted)
2. Tax-free growth (interest, dividends, capital gains all untaxed)
3. Tax-free withdrawal for qualified medical expenses, anytime in your life

That last part is the kicker. Save your medical receipts from age 30 onward, but pay them out of pocket and let the HSA grow. At age 60, withdraw against the receipts you saved — completely tax-free at any income level.

The retirement math

A $4,150/year HSA contribution invested at 7% over 30 years grows to ~$390,000 tax-free. The same $4,150/year in a 401(k) at the same rate produces a similar gross number, but you owe income tax on the way out — typically 25-35% gone. The HSA pulls the same dollar amount without that tax tail.

Eligibility

HSA requires an HSA-eligible high-deductible health plan (HDHP). FSA works with any health plan. If you have the option of an HDHP + HSA in your benefits menu, the HSA almost always wins unless you have predictable, large medical expenses (e.g., chronic condition, fertility, ongoing therapy).