HSA Triple Tax Benefit Calculator
Quantify a Health Savings Account's three tax breaks: a deductible contribution, tax-free growth, and tax-free medical withdrawals.
How it works
Upfront saving = contribution × marginal rate × years · Balance = contribution × [((1+r)^years − 1) ÷ r] · Growth and qualified withdrawals are tax-free
An HSA is the only account with a triple tax advantage: contributions are deductible (and skip payroll tax if made through work), the balance grows tax-free when invested, and withdrawals for qualified medical expenses are tax-free. That makes each dollar work harder than in a 401(k) or Roth IRA, which give only two of the three breaks. After age 65 non-medical withdrawals are taxed like an IRA, so it also doubles as backup retirement savings.
Worked example
Investing $4,150 a year at 6% for 20 years grows to about $152,700. You also save roughly $996 in tax each year up front ($19,920 total at a 24% rate), and the ~$69,700 of growth is never taxed when used for medical bills.
Frequently asked questions
What are the three tax benefits of an HSA?
Contributions are tax-deductible, investment growth inside the account is tax-free, and withdrawals for qualified medical expenses are tax-free. No other account offers all three.
Should I invest my HSA or leave it in cash?
If you can pay current medical bills out of pocket, investing the HSA lets decades of growth compound tax-free, which is where most of the long-term benefit comes from. Keep a cash buffer for near-term expenses.
What happens to an HSA after age 65?
Qualified medical withdrawals stay tax-free at any age. After 65 you can also withdraw for any purpose and pay only ordinary income tax with no penalty, so it works like a traditional IRA for non-medical needs.
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Educational estimate, not tax advice. Uses recent federal parameters that change yearly and ignores your full situation — confirm with a tax professional or the IRS.