About the FSA Tax Savings Calculator
A flexible spending account lets you pay for medical or dependent care costs with money taken out of your paycheck before federal income tax, Social Security, Medicare and (in most states) state income tax. This calculator estimates how much you save by electing a health FSA, a dependent care FSA or both for the 2026 plan year, and it subtracts the money you would forfeit if your election is larger than your actual expenses.
It uses the 2026 limits: up to $3,400 of salary reductions for a health FSA, with up to $680 of unused money carried into 2027 if your plan offers a carryover, and up to $7,500 a year for a dependent care FSA ($3,750 if married filing separately) — raised from $5,000 by the One Big Beautiful Bill Act starting in 2026. Savings are your federal bracket plus state rate plus the 7.65% FICA you avoid (Social Security only on wages up to the $184,500 wage base).
Use it at open enrollment to pick an election amount: enter what you realistically expect to spend and compare the tax saved with the risk of losing unspent money. Most plans are use-it-or-lose-it, so it usually pays to elect slightly less than your predictable costs such as prescriptions, copays, glasses, daycare or after-school care.
With the default inputs, the net benefit after any forfeit is $2,772.00. Change any value above to recalculate instantly.
How to use the fsa tax savings calculator
- 1Choose your filing status and enter your annual salary.
- 2Enter your planned health FSA election and the medical expenses you expect.
- 3Say whether your plan allows a carryover of unused money.
- 4Enter your dependent care FSA election and expected care costs.
- 5Set your federal bracket and state rate, then compare tax saved with any forfeit.
Formula and method
FSA contributions are made through a cafeteria plan, so they are excluded from wages for federal income tax and for Social Security and Medicare taxes, and most states follow the federal treatment (a few tax some contributions, so check your state). The savings are therefore your contribution C times your marginal federal bracket and state rate, plus 7.65% FICA. Social Security savings only apply to the extent your wages are below the 2026 wage base of $184,500; above it, only the 1.45% Medicare part (and the 0.9% additional Medicare tax over $200,000) is saved.
A health FSA election above your actual expenses is lost at year end unless the plan offers a carryover (up to $680 into 2027) or a 2½-month grace period. Dependent care FSA money cannot be carried over, so any amount above your care costs is forfeited. The net benefit subtracts these forfeits from the tax saved.
- C
- Total pre-tax FSA contributions (health + dependent care)
- Carryover
- Up to $680 of unused 2026 health FSA money, if your plan allows
- DCFSA
- Dependent care FSA election (max $7,500, or $3,750 married filing separately)
Worked examples
Family using both FSAs
$8,000 of pre-tax contributions saves $1,760 of federal tax at 22%, $400 of state tax at 5% and $612 of FICA at 7.65% — $2,772 in all. The $500 of unspent health FSA money is within the $680 carryover, so nothing is lost.
Over-elected health FSA with no carryover
Electing the $3,400 maximum saves $804.10 (12% + 4% + 7.65%), but only $1,800 is spent and the plan has no carryover, so $1,600 is forfeited — a net loss of about $796. Electing $1,800 would have saved $425.70 with no forfeit.
High earner above the Social Security wage base
With $250,000 of wages, Social Security tax is already capped, so only Medicare (1.45% plus the 0.9% additional tax) is saved: $256.15. Income tax savings are $10,900 × 38% = $4,142, for $4,398.15 in total.
Frequently asked questions
What is the FSA contribution limit for 2026?+
Health FSA salary reductions are limited to $3,400 per employee for plan years beginning in 2026, and plans may let you carry over up to $680 of unused money. The dependent care FSA limit is $7,500 per household ($3,750 if married filing separately), up from $5,000.
Does an FSA save Social Security and Medicare tax?+
Yes. Health and dependent care FSA contributions made through a cafeteria plan are excluded from FICA wages, so you save 7.65% on top of income tax — unless your wages already exceed the $184,500 Social Security wage base, in which case you save only the 1.45% Medicare tax.
What happens to unused FSA money?+
Health FSAs are use-it-or-lose-it unless your employer offers either a carryover of up to $680 into 2027 or a grace period of up to 2½ months to incur new expenses — not both. Unused dependent care FSA money is forfeited, although some plans offer a grace period.
Can I have an FSA and an HSA at the same time?+
Not a general-purpose health FSA. If you have an HSA-eligible high-deductible plan, you can only pair it with a limited-purpose FSA that covers dental and vision costs (or post-deductible expenses), otherwise you lose HSA eligibility.
Should I use a dependent care FSA or the child care tax credit?+
For most middle- and higher-income families the dependent care FSA saves more because it avoids FICA and state tax as well as federal tax. From 2026 the credit is larger for lower incomes (up to 50% of $3,000/$6,000 of expenses), so lower earners should compare. The same expenses cannot be used for both.
What can I buy with a health FSA?+
Deductibles, copays, prescriptions, over-the-counter medicines, menstrual products, glasses and contacts, dental work and many medical devices. Insurance premiums and purely cosmetic procedures do not qualify.
Tax results are estimates based on published rules and simplified assumptions. They are not tax advice — check official guidance or a tax professional for your situation.
Sources
- IRS — Revenue Procedure 2025-32 (2026 health FSA limit $3,400, carryover $680)
- IRS Publication 15-B (2026) — Employer’s Tax Guide to Fringe Benefits
- Public Law 119-21, section 70404 — Dependent care assistance limit raised to $7,500
- IRS Publication 969 — Health Savings Accounts and Other Tax-Favored Health Plans