FSA Calculator
Calculate the tax you save with a Flexible Spending Account and the amount you risk forfeiting under the use-it-or-lose-it rule.
How it works
Tax savings = election × marginal tax rate · Forfeit risk = max(0, election − expected eligible expenses) · Net benefit = tax savings − forfeited amount
A Flexible Spending Account lets you set aside pre-tax salary for medical or dependent-care costs, so every dollar elected escapes income and payroll tax at your marginal rate. The catch is the use-it-or-lose-it rule: money you do not spend on eligible expenses by the deadline is generally forfeited to your employer. The smart election is close to the expenses you are confident you will incur — high enough to capture the tax break, but not so high that unspent funds vanish.
Worked example
Electing $2,000 at a 24% marginal rate saves $480 in tax. If you only rack up $1,800 of eligible expenses, $200 is forfeited under use-it-or-lose-it — so your net benefit is $480 − $200 = $280 rather than the full $480.
Frequently asked questions
What is the use-it-or-lose-it rule?
FSA funds not spent on eligible expenses by the plan’s deadline are forfeited. Some plans soften this with a grace period of up to 2.5 months or a limited carryover, but many do not, so estimate your spending carefully.
How does an FSA differ from an HSA?
An FSA has no investment growth and money generally does not roll over, while an HSA is investable and yours to keep forever. An FSA does not require a high-deductible health plan, though, so it is available to more people.
Does an FSA save payroll tax too?
Yes. Because FSA contributions come out before Social Security and Medicare taxes as well as income tax, the real savings can exceed your income-tax rate alone — one reason the tax break is valuable when you spend the full election.
Related calculators
Educational estimate only, not tax advice. Contribution limits, catch-up amounts and tax rules change with each year and depend on your income and plan — confirm current figures with a qualified tax professional.