Used to work out your FICA savings correctly above the $184,500 Social Security wage base.
Only applies to the portion you invest rather than spend.
Leave at $0 to model the "pay medical bills out of pocket and let the HSA compound" strategy.
Your tax savings, line by line
| Tax | Rate applied | Saved per year | Notes |
|---|
HSA balance over time
Tax-free growth vs. the same money in a taxable brokerage account
HSA vs. the alternatives
| Where the money goes | Tax on the way in | Tax on growth | Tax on the way out | Net after-tax value |
|---|
Assumes your marginal rates and the return stay constant, that HSA withdrawals are for qualified medical expenses, and that the taxable-account comparison pays tax on gains at a 15% long-term capital gains rate at the end. Real outcomes vary; this is an estimate, not tax advice.
The 7.65% Most HSA Calculators Ignore
Almost every HSA calculator multiplies your contribution by your income tax rate and stops there. That understates the benefit for most people, because it misses FICA.
Contributions made through payroll deduction are exempt from Social Security and Medicare tax. Your employer routes them through a cafeteria plan, so those dollars never appear as FICA wages — saving you 7.65% on top of income tax. Contribute the same amount by transferring money from your own bank account instead, and you can still deduct it on your Form 1040, but you have already paid FICA on those dollars and there is no way to get them back.
On a $8,750 family contribution, that is roughly $669 a year that simply vanishes if you fund the HSA the wrong way — about $13,400 over a 20-year career, before counting what it would have grown to. It is the rare case where how you contribute matters as much as how much.
Two details the calculator handles that most do not:
- Above the Social Security wage base, FICA savings shrink. Social Security tax (6.2%) only applies to the first $184,500 of wages in 2026. Earn more than that and your HSA payroll contribution only escapes the 1.45% Medicare portion — so a high earner's FICA savings are about a fifth of what a mid-earner's are. The tool checks your salary against the wage base.
- California and New Jersey give you no state deduction. Both states refuse to conform to the federal HSA rules: contributions are taxable state income, and interest, dividends and capital gains earned inside the HSA are taxable too. The federal deduction and FICA savings still apply — but tick the box and the tool stops crediting you a state deduction you will not receive.
2026 HSA Limits & Rules
| Item | Self-only | Family |
|---|---|---|
| 2026 contribution limit | $4,400 | $8,750 |
| Catch-up (age 55+) | +$1,000 | +$1,000 each spouse* |
| Maximum with catch-up | $5,400 | $9,750 |
| FICA rate avoided (payroll only) | 7.65% — 6.2% Social Security up to $184,500 of wages, plus 1.45% Medicare with no cap | |
| Non-medical withdrawal penalty | 20% before age 65, plus income tax — no penalty at 65+, income tax only | |
* Spousal catch-up contributions must go into separate HSAs. The contribution limit includes anything your employer puts in. You must be covered by a qualifying high-deductible health plan and not enrolled in Medicare. Limits per IRS Revenue Procedure for 2026; Social Security wage base per SSA. Verify at IRS Publication 969 before filing. Related: full 2026 HSA limits guide and HSA vs FSA comparison.
Getting the Most Out of an HSA
Contribute at work, not from your bank
Same dollars, same deduction — but payroll routing saves an extra 7.65%. If you already contributed directly this year, you cannot retroactively recover the FICA; switch to payroll for next year.
Pay medical bills out of pocket, save the receipts
There is no deadline to reimburse yourself. Let the HSA stay invested for decades, keep your receipts, and withdraw tax-free against them much later. Set the spending field above to $0 to see what that does to the balance.
Invest it — don't leave it in cash
Most HSA providers park your balance in a near-zero-interest cash account by default and require you to opt in to investing, often above a minimum balance. An uninvested HSA throws away the tax-free growth that is the whole point.
Know the order of operations
Capture your full 401(k) employer match first (that is an instant 50–100% return), then max the HSA — it beats the 401(k) because withdrawals for medical costs are never taxed — then go back to the 401(k) or an IRA.
Stop contributing before Medicare
Enrolling in Medicare ends HSA eligibility, and Part A can be backdated up to 6 months. Contributing during that retroactive window creates an excess contribution — stop about 6 months before you enroll.
After 65 it doubles as an IRA
The 20% penalty disappears at 65. Non-medical withdrawals are simply taxed as ordinary income, exactly like a traditional IRA — while medical withdrawals stay entirely tax-free. There is no downside to over-funding it.
Frequently Asked Questions
What are the 2026 HSA contribution limits?
$4,400 for self-only coverage and $8,750 for family coverage, including employer contributions. Age 55+ adds a $1,000 catch-up, so $5,400 or $9,750.
How much tax does an HSA actually save?
Your marginal federal rate plus your state rate on every dollar, plus 7.65% FICA if you contribute through payroll. At 24% federal, a $4,400 payroll contribution saves about $1,056 federal and $337 FICA — before state savings.
Do HSA contributions save FICA tax?
Only through payroll deduction. Contribute from your bank account instead and you keep the income tax deduction but permanently lose the 7.65% — you already paid FICA on those dollars.
Which states tax HSA contributions?
California and New Jersey. Both treat contributions as taxable state income and also tax interest, dividends and capital gains earned inside the HSA. The federal deduction and FICA savings still apply.
What is the triple-tax advantage?
Deductible going in, tax-free growth, and tax-free withdrawals for qualified medical expenses. No other account does all three — a 401(k) taxes withdrawals, a Roth is funded with taxed dollars.
What happens to my HSA at 65?
The 20% non-medical penalty disappears; withdrawals for any purpose are taxed as ordinary income, like a traditional IRA. Medical withdrawals remain tax-free. Enrolling in Medicare ends your ability to contribute.
Should I spend from the HSA or pay out of pocket?
If you can afford it, pay out of pocket, invest the HSA, and keep the receipts. There is no deadline to reimburse yourself, so you can claim decades-old expenses tax-free while the balance compounds.
Is an HSA better than a 401(k)?
For medical spending, yes — it is the only account that is untaxed in and untaxed out, and the only one that also dodges FICA. Standard order: 401(k) match, then max HSA, then back to the 401(k). See our retirement savings calculator.
This calculator provides estimates for educational purposes only and is not tax advice. It uses your marginal rate as a flat rate on the contribution and does not model AMT, NIIT, phase-outs, the additional 0.9% Medicare surtax on wages above $200,000, or employer contributions counting toward your limit. Verify with IRS Publication 969 or a tax professional.