What This Calculator Does
You expect about $2,400 in medical costs this year: a couple of dental cleanings, new glasses, and a deductible for a minor procedure. Your employer offers a health FSA. Should you fund it, and with how much? This calculator weighs the tax savings against the use-it-or-lose-it risk so you can pick an election that actually saves you money.
Enter your FSA type, your planned annual election, your estimated eligible expenses, and your marginal tax bracket. The tool returns your 2026 contribution limit, your tax savings from pre-tax contributions, the amount you might forfeit if you do not spend it all, and an effective savings rate that nets the two together. It works for both health care FSAs and dependent care FSAs.
According to IRS Revenue Procedure 2025-32, the 2026 health FSA contribution limit is $3,400, up $100 from 2025, with a maximum carryover of $680. The dependent care FSA limit is $7,500 for 2026, a large increase from the prior $5,000 cap.
Inputs Required
- FSA Type: Health care FSA or dependent care FSA. The limits and rules differ.
- Annual Election Amount: What you choose to set aside pre-tax for the plan year.
- Estimated Annual Expenses: What you realistically expect to spend on eligible costs.
- Marginal Tax Bracket: Your top federal rate, used to estimate income tax savings.
Outputs Provided
- 2026 Contribution Limit: The IRS cap for your FSA type
- Estimated Tax Savings: Income tax plus FICA saved on pre-tax contributions
- Forfeited Amount: Money at risk under use-it-or-lose-it, after any carryover
- Net Cost After Savings: What you actually spend after tax savings and forfeiture
- Effective Savings Rate: Net benefit as a percentage of your election
How the Calculation Works
An FSA lets you pay for eligible expenses with pre-tax dollars through a cafeteria plan. Because the money avoids both income tax and FICA, the savings rate is your marginal bracket plus 7.65%. The catch is that any unspent balance is forfeited at year end, though health FSAs may carry over up to $680 into the next plan year.
Capped Election = min(Annual Election, 2026 Limit)
Tax Savings = Capped Election x (Marginal Rate + 7.65%)
Used = min(Capped Election, Estimated Expenses)
Forfeited = Capped Election - Used
Effective Savings = (Tax Savings - Forfeited) / Capped Election
For a $2,600 health FSA election at a 22% marginal rate with $2,400 in expected expenses: tax savings are 2,600 x (0.22 + 0.0765) = $770. Used is $2,400, so $200 is at risk of forfeiture, reduced by the $680 carryover if your plan allows it. If the carryover applies, nothing is forfeited. The effective savings rate is about 29.7%.
How to Use the Calculator
- Pick your FSA type. Health FSAs cover medical, dental, and vision. Dependent care FSAs cover childcare or eldercare so you can work.
- Enter your planned annual election. This is the amount you commit to during open enrollment.
- Estimate your eligible expenses for the year. Be conservative to avoid forfeiture.
- Enter your marginal tax bracket. Find it with our Tax Bracket Calculator.
- Read the tax savings and forfeited amount. If forfeiture is high, lower your election.
Example Calculations
Example 1: A Predictable Health FSA
Rachel knows she will spend $2,000 on contacts, dental cleanings, and a deductible for an annual checkup. She elects $2,000 in her health FSA at a 24% marginal rate. Tax savings are 2,000 x (0.24 + 0.0765) = $633. She spends it all, so nothing is forfeited. Her net cost is $1,367 for $2,000 of medical care, a 31.7% discount. This is the ideal FSA outcome: predictable expenses matched to the election.
Example 2: A Dependent Care FSA for Two Kids
The Patel family pays $18,000 per year for daycare for two children. They elect the 2026 dependent care FSA maximum of $7,500 at a 24% marginal rate. Tax savings are 7,500 x (0.24 + 0.0765) = $2,374. They spend the full $7,500 on eligible daycare, so nothing is forfeited. The remaining $10,500 of childcare costs may qualify for the Child and Dependent Care Credit, though you cannot double-dip on the same expenses. The FSA is usually the better deal for higher earners.
Real World Scenarios
Overestimating and Losing Money
Marcus elects $3,400 in his health FSA, expecting a knee surgery that gets postponed to the next year. He only spends $800 on routine care. Without a carryover provision, he forfeits $2,600. His tax savings were 3,400 x 0.2965 = $1,008, but the forfeiture wipes that out and costs him $1,592 net. The lesson: elect only what you are confident you will spend, and check whether your plan offers a carryover or grace period.
The Carryover Safety Net
Elena elects $3,000 and spends $2,500 by December. Her plan has a carryover of up to $680, so $500 rolls into the next plan year and is not forfeited. The remaining $0 is lost only if her plan has no carryover. The carryover gives her a buffer without the strict use-it-or-lose-it penalty. Not all plans offer carryover, so confirm with your HR department before relying on it.
FSA vs HSA When Both Are Offered
A worker with an HSA-eligible HDHP can usually not have a general-purpose health FSA at the same time. But a limited-purpose FSA, which covers only dental and vision, can pair with an HSA. The HSA rolls over forever and is portable, while the FSA is use-it-or-lose-it and tied to your employer. For most people with predictable medical costs, the HSA is the better long-term vehicle. Compare both with our HSA Contribution Calculator.
Common Mistakes to Avoid
- Overestimating expenses: The use-it-or-lose-it rule punishes optimism. Elect conservatively, especially in your first year. You can often change your election only during open enrollment or a qualifying life event.
- Forgetting the carryover or grace period: Some plans offer a 2.5-month grace period instead of a carryover. Know which one your plan uses, because you cannot have both.
- Not submitting receipts: Many FSAs issue a debit card, but some expenses require manual substantiation. Save receipts and submit claims before the deadline, which can extend past year end.
- Confusing dependent care FSA with the Child Care Credit: You cannot use the same expenses for both. For high earners, the FSA usually saves more because it avoids FICA too. Run both to see which wins for your income.
Limitations of This Calculator
This tool estimates federal tax savings using your marginal rate plus 7.65% FICA. It does not account for state taxes, since some states do not conform to federal FSA rules. The forfeiture calculation assumes your plan has a carryover for health FSAs only if you spend within the carryover threshold. Dependent care FSA rules differ by plan and may include a grace period but no carryover. The tool does not model the interaction with the Child and Dependent Care Credit. For exact figures, check your plan documents and consult a tax professional.
Authoritative Research and Resources
- IRS Revenue Procedure 2025-32 (PDF) - The official IRS document setting the 2026 health FSA contribution limit, carryover amount, and dependent care FSA limit.
- IRS Publication 969: Health Savings Accounts and Other Tax-Favored Health Plans - Covers FSA rules, the use-it-or-lose-it rule, carryovers, grace periods, and how FSAs interact with HSAs.
For related tools, compare with our HSA Contribution Calculator, estimate your full tax with our Income Tax Calculator, or find your marginal rate with our Tax Bracket Calculator.