A health savings account is the only account in the tax code with three tax breaks at once: money goes in before income tax, it skips the 7.65% payroll tax when routed through payroll, and withdrawals for medical care are never taxed. Enter your coverage type, age, and contribution plan, and this calculator checks your 2026 limit, prices this year's tax savings, and projects the account's growth against putting the same paycheck dollars in a taxable brokerage account instead.
Every other tax-advantaged account gives the break twice at most. A traditional 401(k) shelters contributions and growth, then taxes withdrawals. A Roth taxes contributions and shelters everything after. An HSA skips tax at entry, skips tax on growth, and skips tax on the way out, provided the money pays qualified medical expenses. On the entry side there are two doors. Contributions through an employer's Section 125 cafeteria plan never appear in W-2 wages, so they dodge income tax withholding and the 7.65% FICA tax together. Contributions made directly are an above-the-line deduction on Schedule 1, reported on Form 8889, which recovers income tax but not FICA. Same dollars, different route, 7.65% of free money.
To contribute at all, you must be covered by a qualifying high-deductible health plan and nothing else that pays medical bills first. The 2026 HDHP floor is a $1,700 annual deductible for self-only coverage or $3,400 for family, with out-of-pocket maximums capped at $8,500 and $17,000 respectively (IRS Rev. Proc. 2025-19). Medicare enrollment ends eligibility, and so does being claimed as a dependent. Dental and vision coverage are allowed alongside the HDHP.
| 2026 limit | Self-only | Family |
|---|---|---|
| Base contribution limit | $4,400 | $8,750 |
| Catch-up, age 55 and older | +$1,000 | +$1,000 per spouse |
| Personal maximum at 55+ | $5,400 | $9,750 |
| HDHP minimum deductible | $1,700 | $3,400 |
| HDHP out-of-pocket maximum | $8,500 | $17,000 |
Source: IRS Rev. Proc. 2025-19 and IRS Publication 969. The contribution limit is combined across every source, including your employer, so the number to check before setting your payroll election is what the employer has already deposited. Each spouse's catch-up must land in that spouse's own HSA; a family's $2,000 of combined catch-up cannot pool into one account. Partial-year eligibility prorates the limit by month unless the last-month rule applies, which requires staying HSA-eligible for the entire following year.
Variables in plain terms. C is your payroll contribution and E is the employer's, which exists only in the HSA scenario because employer seed money rides on the HDHP. M is the medical spending withdrawn each year. r is the expected annual return, N the years, t your marginal income tax rate, and g the tax rate on earnings in a taxable account. The taxable line uses an effective growth rate of r×(1−g) to approximate annual tax drag on dividends and realized gains. The comparison holds your paycheck cost identical in both scenarios and assumes plan premiums are equal, which the note on the calculator flags explicitly.
The default profile is a 40-year-old with self-only coverage electing $3,400 through payroll while the employer adds $1,000. Together that is exactly the $4,400 limit, with no room left and no excess. The tax savings this year are $1,076.10: $816.00 of income tax avoided at a 24% marginal rate plus $260.10 of FICA. Held flat for 25 years, that stream is worth $26,902.50 before a single dollar of investment return.
Now the long game. Subtracting $1,200 of annual medical spending from the $4,400 going in leaves $3,200 a year compounding tax-free at 6%, which reaches $175,566.44 after 25 years. The taxable alternative takes the same paycheck hit, worth $2,323.90 after tax and FICA, pays the same $1,200 of medical bills out of pocket, and invests the remaining $1,123.90 a year at an effective 5.10% after a 15% annual tax on earnings. That account grows to $54,385.98. The HSA's advantage is $121,180.46, roughly 3.2 times the taxable outcome, and most of the gap is the employer's $1,000 plus the untouched FICA saving compounding alongside it.
Push the strategy one step further. Pay the $1,200 of medical costs out of pocket every year and leave the whole $4,400 inside. The balance then reaches $241,403.85 instead of $175,566.44, an extra $65,837.41, and every dollar of it can still be withdrawn tax-free later against receipts you file away today. Withdrawals for qualified medical expenses stay tax-free at any age. After 65, non-medical withdrawals owe only income tax, with no penalty and no required minimum distributions, so the worst case is a traditional IRA with better plumbing.
The one overage trap to know: contributing the headline maximum without checking the employer's deposit triggers a 6% excise tax per year on the excess under IRC Section 4973(g) until it is corrected. A $500 overage costs $30 annually, every year, until removed. On the comparison side, the HSA rarely competes with the 401(k) match, it competes after it: a 50% employer match, sized by the 401k match calculator, beats any tax deduction dollar for dollar. For the tax-advantaged pecking order beyond the match, the Roth vs Traditional IRA calculator covers the contribution-side trade-off, while the payroll mechanics behind the FICA line here are the same ones the take-home pay calculator walks through line by line.
You need coverage under a qualifying high-deductible health plan and no other non-HDHP medical coverage. In 2026 the HDHP must have an annual deductible of at least $1,700 for self-only coverage or $3,400 for family coverage, and an out-of-pocket maximum no higher than $8,500 or $17,000 respectively, per IRS Rev. Proc. 2025-19. Enrolling in Medicare ends contribution eligibility, as does being claimed as someone's dependent. Dental and vision plans are permitted alongside an HDHP.
The 2026 limit is $4,400 for self-only HDHP coverage and $8,750 for family coverage, up from $4,300 and $8,550 in 2025, set by IRS Rev. Proc. 2025-19. People 55 and older add a $1,000 catch-up, giving personal maximums of $5,400 and $9,750. The limit is combined across all sources, including employer contributions, and each spouse's catch-up must go into that spouse's own HSA. If you become eligible partway through the year the limit prorates by month, unless the last-month rule applies and you stay eligible all of the following year.
Contributions made through an employer's Section 125 cafeteria plan skip both income tax withholding and the 7.65 percent FICA tax, because the money never touches your W-2 wages. Contributions you make yourself are deducted above the line on Schedule 1 (reported on Form 8889), which recovers income tax but not FICA. Self-employed people get the income-tax deduction only. That is why routing the same dollars through payroll is worth an extra 7.65 percent before you invest a cent.
Excess contributions carry a 6 percent excise tax each year under IRC Section 4973(g) until you remove them, so a $500 overage left in place costs $30 per year, every year, with the tax computed on the remaining excess. The fix is a corrective withdrawal of the excess plus any earnings it generated, done by the tax filing deadline. Because employer contributions count against the same limit, the most common overage happens when people contribute the headline maximum without checking what their employer already deposited.
Yes, and it is the strongest use of the account. Pay routine medical costs out of pocket, keep the receipts, and reimburse yourself years later for any qualified expense incurred after the HSA was opened. The balance grows free of income tax, withdrawals for qualified medical expenses are always tax-free regardless of age, and after age 65 you can take non-medical withdrawals paying only income tax, the same treatment as a traditional IRA, with no required minimum distributions. One exception to memorize: Medicare Part B and D premiums count as qualified, Medigap premiums do not.
A health FSA is use-it-or-lose-it: 2026 funds beyond a $680 carryover expire, while an HSA rolls over forever and stays yours if you change jobs. Against a 401(k), the HSA wins the tax contest on paper because contributions skip FICA, growth and medical withdrawals are untaxed, and there are no required minimum distributions. In practice the two work together: many savers max any employer 401(k) match first, since a 50 percent match beats any tax break, then fill the HSA. The 401k match calculator shows why the match comes first.
All calculation logic on this page is implemented from the primary documents below. Each one is listed with the figure it supplies, so any rate or threshold in the result can be traced back to its published source.
Contribution limits and plan rules for the current tax year on every page.