Deductions & credits
An FSA tax savings calculator for open enrollment season
An FSA tax savings calculator using 2026 limits: clients see how much income tax and FICA a health or dependent care FSA saves, and what the contribution really costs them.
Included in Network. 14-day trial, cancel any time.
How much does an FSA save in taxes?
An FSA contribution avoids federal income tax at the marginal rate and FICA (6.2% Social Security + 1.45% Medicare (7.65%)2026 · SSA and IRS), and in most states state tax too. At a 22% federal rate plus 7.65% FICA, each $1,000 contributed saves about $296.50. The 2026 limits are $3,4002026 · IRS Rev. Proc. 2025-32 for a health FSA and $7,5002026 · IRS for dependent care.
November, during open enrollment
Open enrollment forms ask for an FSA election with little explanation. Employees worry about the use-it-or-lose-it rule, and parents wonder whether the dependent care FSA beats the child care credit. They have a deadline of a week or two, so they search, and they want a number they can trust.
What the client types into a search box
“is it worth putting money in an FSA and how much should I put in”
How a client works through it
Choose the FSA type
Health care or dependent care; the 2026 limit appears for the type chosen.
Enter the contribution
The annual amount the client plans to elect.
Enter tax rates
The marginal income tax rate and the FICA rate (1.45% for wages above the wage base).
See the savings
Total tax saved, the income tax and FICA parts, and the net cost of contributing.
What lands in your inbox
When a client asks your firm to review the result, the request arrives as a contact record with their inputs and results attached, by email and, on paid plans, by webhook to your CRM.
Received
FSA type, contribution and marginal rate show household income and family situation. A dependent care election points to children and possibly the child care credit. A health FSA near the limit suggests predictable medical costs that may also make an HSA-eligible plan worth reviewing.
What does the net cost of an FSA contribution mean?
Total Tax Savings is split into Income Tax Saved and FICA Tax Saved. Net Cost of Contribution is how much take-home pay falls for the year, which is less than the contribution because of those savings. The client still has the full contribution to spend on eligible expenses.
Annual FSA Limit shows the 2026 cap for the type chosen. The calculator flags the cap but does not stop the client from typing more, so they can see where they are.
Results shown: Total Tax Savings · Income Tax Saved · FICA Tax Saved · FSA Contribution · Net Cost of Contribution · Annual FSA Limit.
A $2,500 health FSA
At a 22% federal rate plus 7.65% FICA, a $2,500 contribution saves $2,500 × 29.65% = $741.25. Take-home pay falls by $1,758.75 over the year, and the employee has $2,500 to spend on eligible medical costs. Add a state rate and the saving grows.
How does an FSA calculator help a tax or payroll firm?
It answers an annual question that otherwise lands on your phone in November, and it prepares clients for filing: dependent care FSA amounts interact with the child and dependent care credit, which you will reconcile in the spring.
Payroll and HR-outsourcing firms can link it in enrollment communications for their employer clients, with lead capture switched off.
Follow-ups this request opens
- Compare a dependent care FSA with the child and dependent care credit
- Check whether an HSA-eligible plan would save more
- Adjust withholding after benefit elections change taxable wages
- Reconcile dependent care benefits on the return
What this calculator leaves out
- Use-it-or-lose-it forfeiture is not modeled; the savings assume the full amount is spent.
- Does not compare a dependent care FSA with the child and dependent care credit.
- State tax savings are included only if the client adds a state rate to the marginal rate.
- Employers' grace period or carryover rules vary and are not applied.
Platform disclaimer shown under the calculator: Estimates only. FSA contributions avoid federal income tax and FICA; most states also exclude them. 2026 limits: $3,400 for a health FSA and $7,500 per household for a dependent care FSA. Unused health FSA money may be forfeited (use-it-or-lose-it). Not tax advice.
Compliance note for firms
An FSA estimate is benefits education, not an election recommendation. If your firm advises on whether to use the dependent care FSA or the credit, that is written tax advice under Circular 230 §10.37 and should rest on the household's actual income and child care costs.
Not legal advice. See our disclaimer and the guide to compliance for client calculators.
2026 figures this page relies on
| Figure | Value | Tax year | Source |
|---|---|---|---|
| Health FSA contribution limit | $3,400 | 2026 | IRS Rev. Proc. 2025-32 |
| Dependent care FSA limit (per household) | $7,500 | 2026 | IRS, as stated in the calculator |
| Employee FICA: Social Security / Medicare | 6.2% Social Security + 1.45% Medicare (7.65%) | 2026 | SSA and IRS |
| Social Security wage base (taxable maximum) | $184,500 | 2026 | SSA |
The same values drive the calculator. Full list on the 2026 figures page.
Terms your client sees in the calculator
These definitions appear in the calculator's collapsible Definitions block, so clients don't have to call to ask what a label means.
- Flexible spending account (FSA)
- An employer-sponsored account funded with pre-tax payroll deductions and used for eligible health or dependent care costs. Contributions avoid federal income tax and FICA, and most states also exclude them. This calculator estimates those tax savings for the amount you elect to contribute for the year.
- Health FSA
- An FSA for out-of-pocket medical, dental and vision costs such as deductibles, copays and prescriptions. The 2026 contribution limit is $3,400 (IRS, 2026, as stated in this calculator). The full annual election is generally available early in the plan year, even before it has been deducted from your pay.
- Dependent care FSA
- An FSA for care of a child or qualifying adult so you can work, such as day care, preschool or after-school programs. The 2026 limit is $7,500 per household (IRS, 2026, as stated in this calculator). Unlike a health FSA, funds are generally available only as they are deducted from pay.
- Use-it-or-lose-it rule
- The rule that FSA money not spent on eligible expenses by the plan deadline is generally forfeited. Some employers offer a grace period or a limited carryover for health FSAs. Because unused dollars are lost, the tax savings shown here only hold if you actually spend the full contribution.
- Marginal tax rate
- The tax rate on your last dollar of income, which is the rate a pre-tax contribution avoids. This calculator asks for your combined federal and state marginal rate, for example 22% federal plus 5% state equals 27%. It is not the same as your average tax rate, which is lower.
- FICA
- The payroll taxes that fund Social Security and Medicare: 6.2% and 1.45% of wages for employees, 7.65% combined, as used in this calculator. FSA contributions are exempt from FICA as well as income tax, which is a large part of the savings, especially at lower incomes.
In our glossary: Flexible spending account · FICA · Marginal tax rate
FSA Tax Savings calculator: questions from firms and clients
What are the 2026 FSA limits?
$3,4002026 · IRS Rev. Proc. 2025-32 for a health FSA and $7,5002026 · IRS per household for a dependent care FSA.
Does an FSA reduce Social Security tax?
Yes, unless wages are above the $184,5002026 · SSA wage base, in which case only the 1.45% Medicare part is saved. The calculator lets the client enter the right FICA rate.
What happens to unused money?
Health FSA money left at year-end may be forfeited unless the employer offers a grace period or carryover. Clients should elect only what they expect to spend.
Is a dependent care FSA better than the child care credit?
Often for higher earners, but it depends on income and costs. That comparison is a good reason to ask your firm.
Can someone have both a health FSA and an HSA?
Generally not a standard health FSA; a limited-purpose FSA may be allowed. The firm should confirm before enrollment.
Do states tax FSA contributions?
Most states exclude them, but not all. The calculator includes state savings only if the client adds a state rate.
When should we feature this calculator?
During open enrollment, usually November, and in January when new elections hit paychecks.
Which plan includes it?
Network, with the other tax calculators. See pricing.
No question matches that filter. Clear it to see them all, search the whole site, or ask us directly; we reply within one business day.
Clients who ask this usually ask next
HSA vs. Traditional Health Plan
should I choose the HSA plan or the PPO
Take-Home Paycheck
why is my paycheck smaller this year and what will I actually take home
HSA Contribution
how much more can I put in my HSA this year
All “Deductions & credits” calculators · Everything in Taxes
Next entry
Answer the November question before the client calls
Embed the FSA Tax Savings calculator on your firm's site in an afternoon and receive requests with the numbers already filled in.
Firm and Network plans include a 14-day trial. Cancel before it ends and you pay nothing.